Economic headwinds and booming interest rates pushed sales down by 3.4% in April as inventory soared 7.2% above March, according to National Association of Realtors data released Thursday
Sales for the segment slid 3.4 percent month over month from a seasonally adjusted annual rate of 4.44 million in March to a seasonally adjusted annual rate of 4.28 million in April. On an annual basis, sales dropped 23.2 percent from 5.57 million in April 2022.
“Home sales are bouncing back and forth but remain above recent cyclical lows,” NAR Chief Economist Lawrence Yun said in a statement. “The combination of job gains, limited inventory and fluctuating mortgage rates over the last several months have created an environment of push-pull housing demand.”
National median-existing home prices declined 1.7 percent annually to $388,800, as prices declined 0.6 percent year over year in the South and 8.1 percent year over year in the West.
Meanwhile, median home prices in the Northeast and Midwest experienced annual gains of 2.8 percent and 1.8 percent, respectively.
As a result of slowing sales, the total housing inventory at the end of April reached 1.04 million units — a 7.2 percent gain from March and a 1.0 percent gain from April 2022. Unsold inventory is at a 2.9-month supply at the current sales pace, up from 2.6 months in March.
“Roughly half of the country is experiencing price gains,” Yun said. “Even in markets with lower prices, primarily the expensive West region, multiple-offer situations have returned in the spring buying season following the calmer winter market. Distressed and forced property sales are virtually nonexistent.”
Bright MLS Chief Economist Dr. Lisa Sturtevant and Realtor.com Chief Economist Danielle Hale said April’s existing-home report was “anything but typical” as continuing declines buck historical spring homebuying trends.
“Market activity is being constrained by elevated mortgage rates, which have pushed some buyers out of the market and have made others sit on the sidelines to wait for rates to fall,” Dr. Sturtevant said in an emailed statement to Inman. “Uncertainty in the economy—from bank failures to debt limit debates—has also shaken consumers’ confidence.”
She added, “As individuals and families feel less certain about the economy, they tend to pull back from big decisions, like buying a home.”
Hale called the market a “glass half-full, half-empty story,” especially for first-time buyers who don’t have the benefit of equity like repeat buyers. Despite financial hurdles, the Realtor.com chief economist said she’s encouraged by the 1.0 percent month over month increase in first-time buyer activity.
“Data show that on balance the optimistic factors pushed first-time homebuyer share up to 28 percent in April from 27 percent in March and 26 percent one year ago – one bright spot amid the market’s challenges,” she said.
Looking forward, Dr. Sturtevant said an abnormally slow spring doesn’t spell doom for the rest of 2023.
“Despite a cooler-than-normal spring market, we shouldn’t be concerned that the housing market is poised for a major correction,” she said. “The change in the median price does not indicate that prices across all local markets and all product types are lower.”
“The recent dip in the overall U.S. median home price likely also reflects a change in the mix of homes sold, as rate-sensitive home shoppers shift to different home types and price points as they navigate the housing market this spring,” she added.