In April, home sales in the United States declined for the second month in a row, and property prices showed the largest drop since 2012, according to a report from the National Association of Realtors (NAR), published on Thursday.
Sales showed some activity, picking up slightly in February after a year-over-year decline driven by rising mortgage interest rates, but that momentum has waned since then.
In April, sales of existing homes, including single-family homes, townhouses, condos and co-ops, were down 3.4% from March. Annual sales decreased 23% from the previous year, and seasonally adjusted annual sales fell from 5.57 million units a year ago to 4.28 million units in April.
April’s drop in sales suggests that February’s buoyancy, which ended the longest monthly decline in home sales on record since 1999, was not successful. Mortgage interest rates rose in February and reached 7% in March, when April’s deals were plentiful.
“Home sales are on some upturn but remain above recent cyclical lows,” National Association of Realtors chief economist said. Lawrence Yun (Lawrence Yun). “The combination of job growth, limited supply in the market, and fluctuations in mortgage interest rates over the past few months has created a dual property demand environment.”
The pace of sales is now higher than at the end of last year, when sales hit a low of 4 million units. However, current sales rates are down 33% from a peak of 6.34 million units in January 2022.
At the same time, all four major US regions are seeing both monthly and yearly declines in sales, but the decline is felt more in high-value regions where real estate prices have risen strongly in the past few years.
In the Northeast and Midwest, sales were down 1.9% from March, while the South was down 3.4% and the West was down 6.1% from the previous month. Year on year sales in the West were down as much as 31%.
The good news for potential buyers is that home prices continue to drop slightly. In April, the median price for existing housing of all types was $388,800, down 1.7% from April 2022. This is the largest decline in house prices since January 2012.
However, prices and the level of competition in the real estate market are uneven in different regions of the United States.
“Approximately half of the country is experiencing price increases,” Yun said. “Even in markets with lower prices, especially in the expensive regions of the West, we are seeing increased supply in the spring after a calmer winter. There are practically no problematic and forced real estate sales.”
Real estate prices rose in the Northeast and Midwest but fell in the South and West. The median price in the Northeast increased 2.8% in April year-over-year to $422,700, while it rose 1.8% in the Midwest to $287,300. In the South, prices were down 0.6% to $357,900, while in the West they fell 8% year-over-year to $578,200.
“Price declines are taking place in regions where there has been growth, and now there is a correction of some of that significant growth,” Yun explained.
The problem of the low level of affordable housing stocks remains relevant.
Spring is the most popular season for home sales, and the number of available homes by the end of April increased by 7.2% compared to March, reaching 1.04 million units.
However, the current inventory level for existing homes is 44% lower than in April 2019, before the coronavirus pandemic, when 1.8 million units were available.
High mortgage rates are preventing some buyers from entering the market, but there is also a shortage of homes for sale, which is having a negative impact on sales volumes, Yoon said. And these two factors are interconnected.
Many current homeowners have mortgage rates a few percentage points below the average current rate of 6.35% and are reluctant to give them up to buy a new home.
“No new offerings are coming in,” Yun said, adding that fewer new offerings hit the market on a weekly basis than in the past.
The US real estate market remains relatively fluid, with properties on average 22 days on the market in April, up from 29 days in March, but more than 17 days in April 2022. Most of the houses, namely 73%, were sold below the original price in April.
Demand is still high, especially with such a limited selection, Yoon said, and some homes are selling above the starting price as a result of competition.
“Sales are down, prices are down as well,” Yun said.