The U.S. residential real estate market faced a drop in existing home sales in April, showing a 3.4% decrease from the preceding month. The annualized sales rate settled at 4.28 million, a figure lower than economists' predictions of 4.30 million, according to recently published data from the National Association of Realtors (NAR). Compared to the same time last year, this marks a significant decline of 23.2%. The median sales price also showed a mild drop, decreasing 1.7% year-on-year to $388,800.
One of the key influencing factors has been the number of houses listed for sale. In April, the count rose to 1.04 million, reflecting a 7.2% month-on-month increase. Yet, this improvement falls short of the traditional seasonal rise, as confirmed by NAR's Chief Economist Lawrence Yun. As a result, homes stayed on the market slightly longer than usual, leading to a minor surge in available inventory compared to the previous year.
On average, homes spent 22 days on the market in April, which is longer than the 17 days recorded a year ago. Approximately 73% of properties sold in April were on the market for less than a month, indicating a fairly brisk pace of transactions despite a more substantial inventory. Consequently, the unsold inventory corresponds to a supply of 2.9 months, significantly less than the six months deemed indicative of a balanced market.
A region-wise breakdown reveals varying patterns. In the Northeast, sales declined by 1.9% month-on-month to an annualized rate of 510,000, showing a notable 23.9% slump compared to April 2022. The Midwest followed a similar trend, with sales dipping 1.9% from the previous month to 1.02 million. The South and the West also witnessed sales drops of 3.4% and 6.1% respectively, along with significant annual declines.
In terms of price, some regions fared better than others. Median prices rose 2.8% year-on-year in the Northeast and 1.8% in the Midwest. However, the South and the West experienced price reductions. Despite this, Yun emphasized that roughly half the country reported price gains, indicating a mixed market situation.
Surprisingly, despite declining sales, homebuilders' confidence has been on the rise, especially among those constructing single-family homes. An increased proportion of potential buyers is leaning towards newly constructed homes, which accounted for over a third of all homes listed for sale in April.
This trend is catalyzing more construction activities. Data for April shows a rebound in building activities compared to the decline witnessed in March. Both housing starts and permits for single-family homes have seen month-on-month increases.
However, the current housing scenario continues to be influenced by mortgage rate factors. Currently, 83% of homeowners hold mortgages with rates below 5%, while the average rate on a 30-year mortgage has remained above 6% since mid-September.
These trends reflect the complex push-pull dynamics of the current housing market. Fluctuating mortgage rates, uneven job gains, and constrained inventory continue to shape demand. Despite this, some regions are still experiencing competitive conditions and price gains. As such, understanding these intricacies becomes crucial in navigating the
While the real estate market grapples with a varied sales climate, a glimmer of hope surfaces for prospective home buyers as property prices saw a mild decrease. The median price of existing homes of all types dropped by 1.7% from April 2022, settling at $388,800.
Yet, the pricing scenario differs across the country. Despite an overall decrease, the Northeast and Midwest regions witnessed an increase in median home prices. In contrast, the Southern and Western regions saw a retreat in prices. Yun highlights that "even in markets with lower prices, primarily the expensive West region, multiple-offer situations have returned in the spring buying season." This implies that despite a decrease in median prices, competition among homebuyers remains robust.
Inventory continues to pose a significant challenge in the market, with mortgage rates playing a critical role. Many homeowners, benefiting from mortgage rates significantly lower than the current average of 6.35%, are reluctant to let go of their properties. However, April saw a rise in the inventory of homes for sale, increasing 7.2% from March to 1.04 million units, a positive development for potential buyers.
Properties typically stayed on the market for 22 days in April, less than the 29 days recorded in March, but higher than April 2022's 17 days. In April, the majority of homes, 73%, were on the market for less than a month. This shows a fairly quick turnover of properties despite the relative scarcity of options.
Overall, the landscape of the U.S. residential real estate market in April was a mixed bag of fluctuating sales, variable prices, and tight inventory. Potential homebuyers and sellers must keep a close eye on these dynamics to make informed decisions. As the market continues to evolve, tracking these trends will remain key to navigating the real estate market successfully.
