Existing home sales fell in April to lowest level since start of pandemic

Sales of beforehand owned properties in April fell to the lowest tempo since the Covid pandemic began, in accordance to the National Association of Retailers.

Existing-home sales declined 2.4% in contrast with March to a seasonally adjusted annualized rate of 5.61 million models, the group mentioned. Sales had been 5.9% decrease than in April 2021. That is the slowest rate since June 2020, which was artificially gradual since the financial system was combating sweeping shutdowns due to the coronavirus.

This rely represents closings throughout the month, so it displays contracts seemingly signed in February and March, when mortgage charges had been rising. The common rate on the 30-year fastened mortgage began February at 3.66% and ended March at 4.78%, in accordance to Mortgage News Daily. It is now hovering round 5.45%.

“We are moving back to pre-pandemic sales activity, but I expect further declines,” mentioned Lawrence Yun, chief economist for NAR, citing that charges are actually increased than they had been when these contracts had been signed.

Not solely had been consumers contending with rising charges, however they noticed little or no reduction in the scarcity of properties on the market. Inventory on the finish of April stood at 1.03 million properties on the market, which is down 10.4% from April 2021. At the present sales tempo that represents a 2.2-month provide.

Tight provide saved home costs increased, regardless of rising rates of interest. The median worth of an present home offered in April was $391,200, the best on report and a rise of 14.8% from a year in the past.

That median is skewed increased as a result of sales proceed to be extra strong on the upper finish of the market, the place the availability is extra strong. Sales of properties priced between $100,000 and $250,000 fell 29% year over year, whereas sales of these priced between $500,000 and $750,000 rose 19%. Sales of properties priced over $1 million rose 16% in contrast with a year in the past.

Sales continued to be swift with the common home sitting on the market simply 17 days earlier than going below contract. The all-cash sale remained excessive at 25% of all sales. Investors made up 17% of sales, and first-time consumers made up simply 28%. Historically, first-time consumers usually made up about 40% of the market.

“The number of households interested in becoming homeowners remains high, despite waning confidence that now is a good time to buy. This is especially true among younger home shoppers, who are likely to be first-time buyers and are struggling to save for a down payment as rents continue to hit records” mentioned Danielle Hale, chief economist for Realtor.com. “At the same time, seller expectations for higher down payments seem to be rising, fueled by a still-competitive housing market and repeat buyers with relatively more equity at their disposal.”

Sales of newly constructed properties will likely be reported subsequent week, however mortgage purposes for these properties dropped practically 11% throughout the month in contrast with April 2021, in accordance to the Mortgage Bankers Association.

“New home purchase activity declined on a monthly and annual basis in April, as the spike in mortgage rates cooled demand, and homebuilders continued to grapple with rising costs, supply-chain issues, and extended completion timelines,” mentioned Joel Kan, MBA’s affiliate vp of financial and business forecasting.

The MBA is predicting new home sales will fall for the fifth consecutive month to the slowest tempo since May 2020.