“The Big Money Show” features Madison Ventures Managing Director Mitch Rochelle breaking down the housing market and highlighting some of the best places to live outside of big cities.
Home sales fell for a second straight month in April as high mortgage rates and near-record home prices continue to stifle a thriving market.
Existing home sales fell 1.9% from the previous month to a seasonally adjusted annual rate of 4.14 million, the National Association of Realtors said Wednesday.
Last month’s decline came as a surprise to housing analysts. Economists surveyed by the Wall Street Journal estimated that existing home sales rose a seasonally adjusted 1.4% in April from March.
Existing home sales fell in April as rising mortgage rates and soaring home prices hit demand. (Photographer: David Paul Morris/Bloomberg via Getty Images/Getty Images)
But rising mortgage rates are slowing sales in the spring, the housing market’s most active period, and in March, existing home sales recorded their biggest monthly decline in more than a year.
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A low inventory of homes for sale is also a hindrance for buyers, as high interest rates have forced many homeowners to stay put. At the current sales pace, there was a 3.5-month supply of homes on the market at the end of April, below the 4-to-6-month supply generally considered to be a balanced market between buyers and sellers.
That shortage is pushing up prices. The national median price of an existing home rose 5.7 percent in April from a year earlier to $407,600, according to the NAR. That’s the highest April price since 1999 and close to the all-time high of $413,800. Prices are not adjusted for inflation.
“Record-high home prices are pushing home affordability to the limits,” NAR chief economist Lawrence Yun said. “This is a very frustrating market for homebuyers.”
High home prices and interest rates have many would-be buyers being priced out of the market. (Nathan Howard/Bloomberg via Getty Images/Getty Images)
Year-over-year, existing home sales fell 1.9% in April. These sales represent the bulk of the housing market and were primarily based on contracts signed in March and February.
Mortgage interest rates have fallen this month. But the average interest rate on a standard 30-year fixed mortgage is still above 7%, according to data released by Freddie Mac last week.
Some people who were waiting for borrowing rates to fall before selling their homes are no longer willing to wait, economists and real estate agents say.
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Alexandra Parkinson and Brian Rathman said they were drawn to the natural beauty of Asheville, North Carolina, and decided to sell their Florida home and move, even though it meant giving up their 4.375% mortgage rate for a higher interest rate.
“We accepted that it wasn’t the best time,” Parkinson says, “but we just wanted to move and didn’t want to disrupt our lives.”
The couple bought a house North Carolina I took out a loan in April and sold my Florida home this month. He hopes to refinance at the end of next year. “I’m looking forward to starting this new chapter,” Parkinson said.
Homes recently sold in the Issaquah Highlands neighborhood in Issaquah, Washington, on Tuesday, April 16, 2024. The National Association of Realtors reported that existing home sales fell in April. (David Ryder/Bloomberg via Getty Images/Getty Images)
The number of homes for sale or under contract as of the end of April increased 16.3% from a year ago, according to the NAR, creating better opportunities for homebuyers who are relocating for a new job, need more space or for other reasons.
“The longer mortgage rates remain at these levels, the more people will either get used to normal interest rates or find their lifestyle disrupted and they’ll have to move anyway,” said Daniel Hale, chief economist at Realtor.com.
The increase in inventory was particularly pronounced in Texas and Florida, where the number of active listings in some markets exceeded pre-pandemic levels in April for this time of year, according to Realtor.com.
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David Ross and his husband were hoping to find a bigger house this spring with space for Ross’s father-in-law. They bought their Round Rock, Texas, home in April and it had been on the market for nearly a year, but they paid $675,000 for it, about $100,000 less than the original listing price, Ross said.
“We’ve been waiting and seeing the market for a while,” he said. “The timing was just right.”
Journal owner News Corp also operates Realtor.com under license from NAR.
