April Existing Home Sales Fall 2.7%
Existing home sales in fell for the third straight month in April, hamstrung by tight inventories and rising home prices, the National Association of Realtors reported Friday.
The report said total existing home sales fell by 2.7% from March to a seasonally adjusted annual rate of 5.85 million in April. However, sales jumped year-over-year, up 33.9% from a year ago (4.37 million).
Single-family home sales dropped to a seasonally adjusted annual rate of 5.13 million in April, down 3.2% from 5.30 million in March but up 28.9% from one year ago. The median existing single-family home price rose to $347,400 in April, up 20.3% from April 2020. Existing condominium and co-op sales improved to a seasonally adjusted annual rate of 720,000 units in April, up 1.4% from March and up 84.6% from one year ago. The median existing condo price rose to $300,400 in April, an increase of 12.6% from a year ago.
Regionally, only the Midwest saw higher sales from the prior month, but all four major U.S. regions recorded year-over-year increases. Sales in the South decreased by 3.7% to an annual rate of 2,600,000 in April, but improved by 39% from a year ago. The median price in the South rose to $289,600, a 15.8% jump from one year ago. Sales in the West declined by 3.1% from the month prior to an annual rate of 1,230,000 in April, but jumped by 53.8% from a year ago. The median price in the West rose to $501,200, up 19.9% from April 2020.
Sales in the Northeast fell by 3.9% from March, but the annual rate of 730,000 represents a 30.4% leap from a year ago. The median price in the Northeast rose to $381,100, up 22.0% from April 2020. Sales in the Midwest rose by 0.8% to an annual rate of 1,290,000 in April and improved by 13.2% from a year ago. The median price in the Midwest rose to $259,300, a 13.5% rise from April 2020.
“The economy and job market are recovering, but the 2.7 percent decline in existing home sales in April is another indication that the housing inventory shortage continues to restrain sales growth,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting with the Mortgage Bankers Association. “The insufficient level of inventory amidst fierce competition is putting upward pressure on home prices in most parts of the country.”
Kan said the upward drift in the cash-purchases share to 25 percent compared to 15 percent last year, and another increase in the median sales price to a record high $341,600, was no surprise given the imbalance of supply and demand. “In the short-term, inventory shortages will persist. U.S. Census Bureau data from [last] week showed residential housing starts have started to slow due to challenges in the cost and availability of building materials,” he said.
“Housing supply continues to fall short of demand,” said Lawrence Yun, NAR chief economist. “We’ll see more inventory come to the market later this year as further COVID-19 vaccinations are administered and potential home sellers become more comfortable listing and showing their homes. The falling number of homeowners in mortgage forbearance will also bring about more inventory.”
Yun said despite the decline, housing demand is still strong compared to one year ago, evidenced by home sales from this January to April, which improved by 20% from a year ago. “The additional supply projected for the market should cool down the torrid pace of price appreciation later in the year,” he said.
“The economy and job market are recovering, but the 2.7 percent decline in existing home sales in April is another indication that the housing inventory shortage continues to restrain sales growth. The insufficient level of inventory amidst fierce competition is putting upward pressure on home prices in most parts of the country.”
–Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting.
“We expect the number of homes available for sale to rise further in coming months, as risks surrounding COVID diminish and homeowners rush to take advantage of one of the strongest seller’s markets ever,” said Mark Vitner, Senior Economist with Wells Fargo Securities, Charlotte, N.C. “Sellers can typically sell their home within a month, at or above their asking price, while making minimal repairs and upgrades.”
Vitner noted a “massive shift” toward suburban homeownership, which has dramatically altered the supply-demand balance around the country. “Home buyers are looking for more space to accommodate remote working and remote schooling,” he said. “The surge in demand amidst near record low inventories has pulled home prices sharply higher and is fueling an affordability migration to the suburbs and lower costs metro areas in the South and Mountain West.”
NAR said the median existing home price for all housing types in April rose to a record-high $341,600, up 19.1% from a year ago ($286,800), as every region recorded price increases, marking 110 straight months of year-over-year gains.
Total housing inventory at the end of April rose to 1.16 million units, up 10.5% from March but down 20.5% from one year ago (1.46 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, slightly up from March’s 2.1-month supply and down from the 4.0-month supply recorded in April 2020. These numbers continue to represent near-record lows.
The report said properties typically remained on the market for 17 days in April, down from 18 days in March and from 27 days in April 2020. Eighty-eight percent of the homes sold in April were on the market for less than a month. First-time buyers represented 31% of sales in April, down from 32% in March and 36% a year ago.
NAR said individual investors or second-home buyers purchased 17% of homes in April, up from 15% in March and 10% in April 2020. All-cash sales accounted for 25% of transactions in April, up from both 23% in March and 15% a year ago.
Distressed sales represented less than 1% of sales in April, equal to March’s percentage but down from 3% a year ago.