In April, sales of previously owned homes were nearly unchanged from March, with a slight increase of 0.2% to 4.02 million units on a seasonally adjusted annualized basis, as reported by the National Association of Realtors (NAR). This figure fell short of analysts' expectations, which anticipated a rise of over 3%. Year-over-year, home sales remained flat.
The sales data reflects closings from contracts likely signed in late February and March, during which the average rate for a 30-year fixed mortgage was in the high 5% range. However, mortgage rates surged sharply due to geopolitical tensions stemming from the U.S.-Israel conflict with Iran.
Lawrence Yun, NAR's chief economist, noted that despite mixed economic indicators, including a record-high stock market and low consumer confidence, home sales saw a modest boost from improved housing affordability. He pointed out that mortgage rates are lower than a year ago, and income growth is outpacing home price increases.
In April, housing inventory rose by 5.8% from March but was only up 1.4% compared to the previous April, resulting in a 4.4-month supply, which is still considered tight as a balanced market typically requires a 6-month supply.
Yun emphasized the need for a 30% increase in inventory to alleviate market pressures, although multiple offers are still occurring, albeit less intensely than in previous years. The average days on the market increased to 32 days, up from 29 days a year earlier, indicating that buyers are taking longer to make decisions.
Consequently, home prices have risen, with the median price in April reaching $417,700, a 0.9% increase from the previous year and the highest recorded for April by the NAR. First-time buyers accounted for 33% of sales, a slight decrease from the previous year, while cash sales remained steady at 25%.
As mortgage rates have risen to 6.42% this week, reports indicate that while pending sales have seen some increase in April and May, supply is tightening again, which is likely to continue driving prices higher