WASHINGTON (Reuters) – Existing home sales in the US fell for a second month in a row in April, with prices rising in about half the country, which, along with possibly higher mortgage rates, could slow a housing market recovery.
Existing home sales fell 3.4% last month to a seasonally adjusted annual rate of 4.28 million units, the National Association of Realtors said Thursday. Sales fell in all four regions. Economists polled by Reuters had predicted home sales would fall to 4.30 million units.
Home resales, which account for a large portion of US home sales, fell 23.2% year-on-year in April.
The housing market has taken the brunt of the Federal Reserve’s fastest tightening campaign since the 1980s. The average rate on the popular 30-year mortgage has fallen from a peak of 7.08% in November, the highest since 2002. Last week it averaged 6.35%, still higher than 5.30% a years ago, according to data from mortgage financing agency Freddie Mac.
The continued tight housing supply makes it difficult for potential buyers to re-enter the market to take advantage of the fall in mortgage rates. Supply is unlikely to improve as many homeowners continue to live in their homes for longer, deterred by still high mortgage rates.
Shortages of transformers and other building materials have significantly slowed the rate at which new homes are completed. Tightening credit conditions may also make it more difficult for builders to finance new projects.
The median price of existing homes fell 1.7% from a year earlier to $388,800 in April. Still, markets in the Northeast and Midwest regions reported price increases.
“About half of the country is experiencing price increases,” said Lawrence Yun, NAR chief economist. “Even in markets with lower prices, especially in the expensive West region, there are again situations with multiple offers in the spring, after the quieter winter market.”
Last month there were 1.04 million owned homes on the market, 1.0% more than a year ago.
At the April sales rate, it would take 2.9 months to deplete the current stock of existing homes, compared to 2.2 months a year ago. A supply of four to seven months is seen as a healthy balance between supply and demand.
Property typically remained on the market for 22 days in April, compared to 29 days in March. Seventy-three percent of homes sold last month were on the market for less than a month. New buyers accounted for 29% of sales, compared to 28% a year ago.
28% of transactions were cash sales compared to 26% a year ago. Distressed sales, including bankruptcies, accounted for just 1% of transactions, unchanged from March and the previous year.
(Reporting by Lucia Mutikani; editing by Paul Simao)
