Sales of existing homes in the U.S. fell sharply in April as prospective buyers struggled with the prohibitively expensive housing market.
The National Association of Realtors (NAR) announced Wednesday that home sales fell 1.9% in April to an annualized rate of 4.14 million units. The figure, which represents the number of homes that would be sold in a year at a constant monthly sales pace, was lower than Wall Street expected. Analysts had expected a slightly higher number of 4.21 million units.
Home sales also fell 1.9% year-over-year compared to April 2023.
Despite the slowdown in sales, prices rose significantly in the housing market. The average price of existing homes rose 5.7% to $407,600 in April, the highest price ever for April.
This increase represents the largest increase in home prices since October 2022. Still, it’s below its peak in June 2022, when the median price for existing homes was $413,800.
Rising prices reduce people’s ability to buy a home, especially when mortgage rates are high.
“Home prices hitting an all-time high for April is great news for homeowners,” said NAR chief economist Lawrence Yun. “However, with more available housing inventory, the pace of price growth should slow.”
Rising home prices are a blessing for more homeowners. Owners want their property to increase in value, but rising prices mean owners have to pay more for their next home.
The average interest rate for a 30-year fixed mortgage in April was 6.99. Mortgage rates have been rising this year as a resurgence in inflation stifled hopes for a Federal Reserve rate cut.
Approximately 27% of properties sold in April were sold for above list price, indicating intense competition among buyers. NAR also highlighted that home sales priced at $1 million or more increased significantly, increasing 40% year-over-year and outpacing all other price categories.
There was a glimmer of hope for prospective buyers.
The number of homes on the market rose 9% from the previous month to 1.21 million. This represents an increase of 16.3 percent compared to a year ago. At the current sales pace, there will be 3.5 months worth of unsold inventory, up from 3.2 months in March and 3% in the same period last year. For homes priced at $1 million or more, inventory and sales were up 34% and 40%, respectively, compared to a year ago.
“While home sales overall remained largely unchanged, the luxury market has experienced a significant increase as more supply enters the market,” Yun said. .
