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The rate of sales of previously owned homes fell in April, the third straight month of declining sales, even while prices climbed to a new record.
Existing home sales fell 2.4 percent to a seasonally adjusted annual rate of 5.61 million in April, the slowest rate since June 2020, according to data released Thursday by the National Association of Realtors.
Although real estate was generally considered an essential service, sales were held back in June of 2020 by the pandemic, restrictions on travel, and social distancing. In many places, prospective buyers were required to wear masks, gloves, and even foot coverings.
Sales were 5.9 percent lower than the year-ago level.
Home prices continued to skyrocket. The median existing price for a home sold in April rose to a record $391,200, 14.8 percent above last year’s median price.
“The market is quite unusual as sales are coming down, but listed homes are still selling swiftly, and home prices are much higher than a year ago,” said Lawrence Yun, NAR’s chief economist.
Sales of existing homes are counted at closing, meaning these homes would have entered into contract in February and March. Mortgage rates moved sharply higher in the second half of February and March, making home affordability a harder hurdle for many would-be buyers.
“Higher home prices and sharply higher mortgage rates have reduced buyer activity,” said Yun. “It looks like more declines are imminent in the upcoming months, and we’ll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years.”
There are some signs that high prices are drawing more sellers into the market. Total housing inventory at the end of April amounted to 1,030,000 units, up 10.8 percent from March but down 10.4 percent from one year ago. A the current rate of sales, there is a 2.2-month supply of unsold homes on the market, up from 1.9 months in March and down from 2.3 months in April 2021.
“Housing supply has started to improve, albeit at an extremely sluggish pace,” said Yun.
The share of first-time buyers in April was 28 percent, down from 30 percent the month prior and 31 percent a year ago. Historically, first-time buyers made up around 34 percent of the market for existing homes but many new families have been priced out of the market.
Rates have continued to climb, putting houses even more out of reach for many who would like to buy a home. The rate on the thirty-year fixed mortgage was around 3.75 percent at the start of March. It is now around 5.25 percent.
Single-family home sales fell to a seasonally adjusted annual rate of 4.99 million in April, down 2.5 percent from March and down 4.8 percent from one year ago. The median existing single-family home price was $397,600 in April, up 14.8 percent from April 2021.
Compared with a year ago, sales of homes priced above $500,000 were up sharply. Sales of less expensive homes were down sharply, demonstrating how the high-end and low-end of the market are moving in different directions. Sales of homes priced over $1 million were up 16.3 percent from a year ago and now account for 7.8 percent of the market, up from 5.6 percent last August. Sales of homes priced under $250,000 made up 24.9 percent of the market, down from 29.7 percent in August.