According to a report released by the National Association of Realtors (NAR), existing home sales fell by 1.9% in April, reaching a seasonally adjusted annual rate of 4.14 million units, down from the revised March figure of 4.22 million units. Sales volume also declined across regions, with the Northeast experiencing a 4% drop, the West a 2.6% decline, the South a 1.6% decrease, and the Midwest a 1% decrease. Meanwhile, the median price for existing homes rose by 5.7% to $407,600, marking the tenth consecutive month of increases and setting a record high for April.
Lawrence Yun, Chief Economist at NAR, expressed disappointment over last month's sales decline. Previous expectations were for April sales to reach 4.20 million units. The continued rise in mortgage interest rates has also become a major constraint on the market. The 30-year fixed-rate mortgage rate has risen in five of the past six weeks, currently standing at 7.02%, compared to 6.39% a year ago. High rates and high prices have deterred many prospective buyers, especially low- and middle-income individuals.
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Housing inventory increased by 9% compared to March, reaching 1.20 million units. This marks the fourth consecutive month of growth but remains below pre-pandemic levels, which were at 1.70 million units. However, the sales activity in the high-end housing market has been relatively active, with sales of homes priced at over $1 million increasing by 40% compared to a year ago, partly due to a 34% surge in inventory for these homes.
Robert Frick, Economist at Navy Federal Credit Union, pointed out that the continuous rise in mortgage interest rates has continued to suppress listing and purchasing behaviors. He believes that the only way to truly alleviate this situation is for the Federal Reserve to cut interest rates later this year, which will ultimately permeate into mortgage interest rates and stimulate activity in the real estate market.
Despite facing many challenges, the report also shows that one-third of sales went to first-time buyers, reaching the highest proportion since January 2021. This suggests that despite the market's challenges, first-time buyers are still actively participating, possibly benefiting from the rise in housing prices. However, their share remains below the historical average of 40%.
