Home sales fell in April for the second straight month, as high mortgage rates and near-record home prices continue to stall the market during the prime selling season.
Sales of previously owned homes decreased 1.9% from the prior month to a seasonally adjusted annual rate of 4.14 million, the National Association of Realtors said Wednesday.
The decline last month came as a surprise to housing analysts. Economists surveyed by The Wall Street Journal estimated sales of previously owned homes rose a seasonally adjusted 1.4% in April from March.
But high mortgage rates are keeping a lid on the spring season, typically the busiest time of year in the housing market. In March, existing-home sales posted their biggest monthly decline in more than a year.
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The low inventory of homes for sale is also thwarting buyers, because high rates have prompted 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 four to six months’ supply that is generally considered a market balanced between buyers and sellers.
That shortage is pushing prices higher. The national median existing-home price rose 5.7% in April from a year earlier to $407,600, NAR said. That was the highest price for any April data going back to 1999 and approaching the record high of $413,800. Prices aren’t adjusted for inflation.
“Record-high home prices are hitting affordability,” said Lawrence Yun, NAR’s chief economist. “For a home buyer, it is a very frustrating market out there.”
On an annual basis, existing home sales were down 1.9% in April. These sales make up most of the housing market and were largely based on contracts signed in March and February.
Mortgage rates have fallen this month. But the average rate on the standard 30-year fixed mortgage is still above 7%, according to last week’s data from Freddie Mac.
Some people who have been waiting for borrowing rates to fall before selling their homes can’t wait any longer, economists and real-estate agents say.
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Alexandra Perkinson and Brian Russman said they were drawn to the natural beauty of Asheville, N.C. So they decided to sell their Florida home and move, even though it meant giving up a 4.375% mortgage rate for a higher one.
“We kind of acknowledged that it’s not the best time,” Perkinson said. “But we just wanted to move and we didn’t want to put our life on hold.”
The couple bought a house in North Carolina in April and sold their Florida home this month. They hope to refinance at the end of next year. “We are excited about a new chapter,” Perkinson said.
The number of homes for sale or under contract at the end of April rose 16.3% from a year earlier, NAR said. That gave home shoppers who were relocating for new jobs, needed more space, or had other reasons to move a better opportunity.
“The longer that we are at mortgage rates at these levels, the more people acclimate to them as normal, or just have life happen and they need to move anyway,” said Danielle Hale, chief economist at Realtor.com.
The inventory increases have been especially pronounced in Texas and Florida, where the active listings in some markets in April rose above prepandemic levels for this time of year, according to Realtor.com.
David Ross and his husband wanted to find a bigger home this spring with room for Ross’s father-in-law. They bought a house in April in Round Rock, Texas, that had been on the market for almost a year, and they paid $675,000, which was about $100,000 less than the initial listing price, Ross said.
“We waited and watched the market for a while,” he said. “It was just the right time.”
News Corp, owner of the Journal, also operates Realtor.com under license from NAR.
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