High mortgage rates and rising prices continued to put a damper on the spring home-buying season last month.
Existing home sales in April fell 1.9 percent to a seasonally adjusted annual rate of 4.14 million, from a revised 4.22 million in March, the National Association of Realtors said Wednesday.
Sales were down nationwide, with declines of 4 percent in the Northeast, 2.6 percent in the West, 1.6 percent in the South and 1 percent in the Midwest.
The median price of an existing home rose 5.7 percent to $407,600, the 10th consecutive increase and the highest April price on record.
Lawrence Yun, the association’s chief economist, said the sales decline was “a little frustrating.” Economists had expected sales to be 4.2 million units.
The interest rate on the benchmark 30-year fixed-rate loan has risen in five of the past six weeks to 7.02% from 6.39% a year ago.
Potential homebuyers are also hesitant due to soaring prices, driven in part by a tight inventory of available homes.
Housing supply increased 9% from March to 1.2 million units, the fourth consecutive year of growth, but remains at a low level. Before the pandemic, there were 1.7 million homes. Homeowners are hesitant to put their homes on the market in part because they don’t want to sell off their existing low-interest mortgages and buy new homes with higher interest rates.
If the Fed cuts interest rates later this year, that could provide some relief for the housing market.
“Typically, we would see a surge in home sales at this time of year, but mortgage interest rates continue to suppress listings and purchases,” said Robert Frick, an economist at Navy Federal Credit Union. Ta.
“And unfortunately, prices continue to rise, pushing opportunities away from low-income and even middle-income Americans. The only real relief is if the Fed cuts interest rates later this year. This will ultimately be reflected in mortgage interest rates.”
Sales were stronger in the luxury market: Homes priced above $1 million jumped 40% from a year ago, in part because inventory of those homes jumped 34%.
A third of sales came from first-time buyers, the highest share since January 2021, but still below the 40% made up by past buyers.
