With mortgage rates staying high and widespread uncertainty about the economy, the number of existing single-family home and condo sales in April was the lowest for the month in 16 years.
Sales fell half a percentage point month over month to 4 million, the National Association of Realtors said Thursday. But reflects a 2% drop from one year ago.
It’s unclear whether the rest of the spring buying season, usually the time of year when sales are most brisk, will be better.
The most important factor for would-be buyers continues to be persistently high interest rates near 7%, according to NAR chief economist Lawrence Yun, even with the share of homes on the market growing each month.
“The upcoming months will be very important: This is the Christmas season for Realtors,” Yun said.
Sellers' grip on the market eases
At just under 1.5 million homes, the inventory available for purchase is up more than 20% from a year ago, but it’s still short of the supply before the pandemic started in 2020, Yun said.
On the upside for buyers, Yun noted that the increasing supply is lessening sellers’ advantage in negotiating sale prices. It would take 4.4 months to exhaust the current inventory of homes on the market, compared to 3.5 months a year ago.
This change means the market is close to being balanced between sellers and buyers, Yun said.
Due in part to that growing supply, first-time home buyers accounted for 34% of sales in April, the most in six years. The NAR reported last fall that in 2024, first-time buyers’ share of the market was just 24%.
Home price increases slow
While median sales prices are still high, reaching the highest-ever level for April at $414,000, the pace of increases has slowed. In April, the median rose 1.8% from one year earlier. While the Northeast and Midwest posted price increases, the South and West saw declines.
Contracts to buy existing homes had risen more than 6 percent in March, a possible indicator that sales would see improvement the following month. But listing agents told the NAR in a more recent survey that 7% of contracts were canceled last month, a substantial change from the 4% rate a year ago.
The recent sharp stock market downturn could have been a factor, Yun said, or sudden changes in mortgage rates.
Perhaps due to stock prices tumbling in the late-winter months, the increase in sales of homes priced at more than $750,000 slowed in April, Yun said. Sales above that threshold rose 5%, while contracts between $250,000 and $750,000 were up 1%.
On a regional level, the Midwest saw a 2.1% increase in sales. Two of the four major regions saw declines — 3.9% in the West and 2% in the Northeast — while sales in the South were unchanged.
“There is a huge gap between potential demand versus realized demand,” Yun said. “The fact that sales are not rising with the increase in inventory shows that mortgage rates are a big driver for how people get into the market. I think the desire is there, but financial capability is limited.”
Sales activity is likely to fall further in the next few months due to “softening economic activity and affordability constraints,” Nancy Vanden Houten, lead economist at Oxford Economics, said in a statement.