Sales of previously occupied U.S. homes fell in April, as elevated mortgage rates and rising prices discouraged prospective homebuyers during what’s traditionally the busiest time of the year for the housing market.
Existing home sales dropped 0.5% last month, from March, to a seasonally adjusted annual rate of 4 million units, the National Association of Realtors said Thursday. The sales decline marks the slowest sales pace for the month of April going back to 2009 in the wake of the U.S. housing crisis. March’s sales pace was also the slowest for that month going back to 2009.
Sales fell 2% compared with April last year. The latest home sales fell slightly short of the 4.10 million pace economists were expecting, according to FactSet.
Home prices increased on an annual basis for the 22nd consecutive month, although at the slowest rate since July 2023. The national median sales price rose 1.8% in April from a year earlier to $414,000, an all-time high for the month of April.
“The affordability condition is clearly hurting the market, particularly higher mortgage rates,” said Lawrence Yun, NAR’s chief economist.
For the past three years, sales of previously occupied U.S. homes have been at about 75% of what they were before the pandemic. The market slump began in early 2022, when mortgage rates began to climb from pandemic-era lows. Homes sales fell last year to their lowest level in nearly 30 years.
The average rate on a 30-year mortgage has remained relatively close to its high so far this year of just above 7%, which it set in mid-January, according to mortgage buyer Freddie Mac. The average rate’s low point so far was five weeks ago, when it briefly dropped to 6.62%. This week, it averaged 6.86%, its highest level since mid-February.
Homes purchased last month likely went under contract in March and April, when the average rate on a 30-year mortgage ranged from 6.62% to 6.83%.
High mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have frozen out many would-be homebuyers struggling to find a home they can afford.
Homeownership is out of reach for many Americans after years of surging home prices. The median U.S. home sales price has jumped 53% over the past six years.
Home shoppers who can afford to buy at current mortgage rates are benefiting from more homes on the market when compared with recent years.
There were 1.45 million unsold homes at the end of last month, a 9% increase from March, and 20.8% higher than April last year, NAR said. That's the most homes on the market since September 2020, but it's still well below the roughly 2 million homes for sale that was typical before the pandemic.
The latest unsold inventory snapshot translates to a 4.4-month supply at the current sales pace, up from a 3.5-month pace at the end of April last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.
One reason the inventory of homes for sale has been rising is that properties are taking longer to sell. Homes typically remained on the market for 29 days last month before selling, up from 26 days in April last year, NAR said.
The wider selection of homes on the market likely helped boost sales among first-time homebuyers. They accounted for 34% of sales last month, the highest level since July 2020, but that is still down from the historical norm of 40%.
Home shoppers who can afford to sidestep mortgage rates and pay all cash for a home accounted for 25% of sales last month, down from 28% a year earlier. Investors, who account for many all-cash purchases, made up 15% of homes sold last month, down from 16% a year earlier, NAR said.
Alex Veiga, The Associated Press
