US Home Sales Decline Amid Rising Prices and Mortgage Rates

In April, sales of previously occupied homes in the U.S. took a dip as both mortgage rates and prices increased, which is, well, a bit disappointing for potential home buyers. It’s usually a peak time in the housing market, too.

According to the National Association of Realtors, existing home sales decreased by 0.5% last month, adjusting to an annual rate of about 4 million units since March. This marks the slowest sales in April since 2009.

Interestingly, sales in March were already lagging, being the slowest for that month in nearly 14 years.

Compared to April of last year, homes sales fell by 2%. And if you look at the latest figures, they barely scratched the expectations of economists who anticipated a 4.1 million pace, falling short of the targeted 420 million.

Home prices, meanwhile, have continued their upward trajectory for 22 consecutive years, though the rate of increase has started to decelerate. The median selling price reached $414,000 in April, which is a 1.8% rise from last year and the highest figure for that month ever. That’s quite a leap, isn’t it?

Lawrence Yun, the chief economist at NAR, commented on the situation, stating that affordability issues, particularly with mortgage rates, are prevalent in the market.

The housing market in the U.S. has been witnessing something of a sales recession since 2022. This downturn followed the rise in mortgage rates from their pandemic lows, with last year seeing sales fall to their lowest levels in almost 30 years.

Currently, the average 30-year mortgage rates are hovering just above 7%, a rate that was established back in mid-January.

Interestingly, last month saw a brief drop in rates to around 6.62%, creating a fleeting moment of hope for buyers.

This rise in mortgage rates has added hundreds of dollars to monthly payments, effectively freezing many potential buyers despite the noticeable increase in the market inventory of homes since last year.

At the end of April, there were approximately 1.45 million homes available for sale, which was a 9% increase from March and a staggering 20.8% jump from last April, as per NAR. This surplus translates to about 4.4 months of inventory at the current sales pace, compared to just 3.5 months at the same time last year.

Generally speaking, a balanced market for buyers and sellers is considered to have a supply of around 5-6 months.