As rising mortgage rates and higher home prices continued to price out first-time and young homebuyers and reduce affordability, existing home sales dropped to the lowest level since June 2020, according to the National Association of Realtors (NAR). However, the trend in home price appreciation continued as supply remained tight.
Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, fell 2.4% to a seasonally adjusted annual rate of 5.61 million in April. On a year-over-year basis, sales were 5.9% lower than a year ago.
The first-time buyer share fell to 28% in April, down from 30% in March and down from 31% a year ago. The April inventory level increased from 0.93 to 1.03 million units but was still down from 1.15 million units a year ago.
At the current sales rate, April unsold inventory sits at a 2.2-month supply, up from 1.9-months last month but down from 2.3-months a year ago. This low supply of resale homes is ongoing good news for home construction.
Homes stayed on the market for an average of just 17 days in April, equal to the number of days in March and a year ago. In April, 88% of homes sold were on the market for less than a month.
The April all-cash sales share was 26% of transactions, down from 28% last month and up from 25% a year ago.
Tight supply continues to push up home prices. The April median sales price of all existing homes was $391,200, up 14.8% from a year ago, representing the 122nd consecutive month of year-over-year increases, the longest-running streak on record. The median existing condominium/co-op price of $340,000 in April was up 13.1% from a year ago.
Regionally, existing home sales were mixed in April. Sales in the Northeast and Midwest rose 1.5% and 3.1% from last month, while sales in the South and West fell 4.6% and 5.8%. On a year-over-year basis, sales in all four regions declined in April, ranging from 1.5% in the Midwest to 10.7% in the Northeast.
Meanwhile, the Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI decreased 1.2% from 105.0 to 103.7 in March. On a year-over-year basis, sales were 8.2% lower than a year ago per the NAR data.
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Unfortunately. interest rates will continue to rise as the FED plays catch up and this will further erode sales as Inventory will continue to build. This will undoubtedly result in declining home values and equity as the past has proven. Builders should now be totally focused on preventing losses in their sales backlog as many may no longer qualify for their mortgsge and some will fjnd their purchase is no longer the bargain they knce though it was. I suggest a thorough review of the sales backlog to identify those who have not locked a rate in or whose rate lock may expire before construction is completed..