Existing Home Sales Fall April 2023
From Reuters and Yahoo, existing home sales fell in April 2023, but narrowly missed a number guessed at by economists in a Reuters poll. Here are the facts:
- U.S. existing home sales declined for the second consecutive month in April, potentially delaying the housing market recovery. The National Association of Realtors reported a 3.4% drop in existing home sales to a seasonally adjusted annual rate of 4.28 million units in April.
- Economists polled by Reuters had predicted a decrease to a rate of 4.30 million units.
- On a year-on-year basis, home resales plummeted by 23.2% in April.
- The Federal Reserve’s aggressive monetary policy tightening, with higher mortgage rates, has significantly impacted the housing market.
- The average rate for a 30-year fixed mortgage was 6.35% last week, higher than the previous year’s 5.30% but down from a peak of 7.08% in November, the highest since 2002.
- Limited housing supply is making it challenging for potential buyers to take advantage of lower mortgage rates. Homeowners are living longer in their properties due to the still-high mortgage rates, resulting in persistently tight housing supply.
- Shortages of building materials, including transformers, have slowed down the completion of new homes. Tightening credit conditions could further hinder builders’ ability to finance new projects.
- The median price of existing houses fell 1.7% to $388,800 in April compared to the previous year. However, price gains were reported in the Northeast and Midwest regions.
- Lawrence Yun, the NAR’s chief economist, noted that roughly half of the country is experiencing price gains, even in markets with lower prices.
- There were 1.04 million previously owned homes on the market in April, a 1.0% increase from the previous year.
- At the current sales pace, it would take 2.9 months to exhaust the existing inventory of homes, up from 2.2 months a year ago. A healthy balance between supply and demand is typically considered to be a four-to-seven-month supply.
- Properties remained on the market for an average of 22 days in April, down from 29 days in March. Approximately 73% of homes sold in April were on the market for less than a month.
- First-time buyers accounted for 29% of sales, up from 28% the previous year.
- All-cash sales represented 28% of transactions, while distressed sales, including foreclosures, made up only 1% of transactions.
- Regionally, home sales declined in all four regions: Northeast, Midwest, South, and West.
- Home sales in the Northeast fell 1.9% from March and 23.9% from April 2022 levels. The median price in the Northeast increased by 2.8% to $422,700 compared to the previous year.
- Sales in the Midwest decreased by 1.9% from the previous month and 21.5% from the prior year. The median price in the Midwest rose by 1.8% to $287,300 from April 2022.
- The South saw a 3.4% decline in sales from March and a 20.2% decrease from the previous year. The median price in the South dropped by 0.6% to $357,900 compared to April 2022.
- In the West, sales dropped 6.1% from the previous month and 31.3% from the previous year. The median price in the West fell by 8.0% to $578,200 compared to April 2022.
- The shortage of homes for sale has boosted confidence among single-family homebuilders, as more buyers turn to the new-home market. In April, over a third of homes on the market were new construction, compared to the typical share of 13%.
- The scarcity of housing stock is primarily due to the mortgage rate trap, with homeowners reluctant to sell as it would result in higher borrowing costs. Approximately 83% of homeowners have mortgages with rates below 5%, while the average rate on a 30-year mortgage has remained above 6% since mid-September.
Existing home sales fall again in April amid continued inventory woes
US Existing-Home Sales Fall to Three-Month Low, While Prices Retreat