LOS ANGELES (AP) — Sales of pre-occupied homes in the US fell again last month, providing more evidence that many would-be homebuyers are being held back by a persistently low inventory of homes for sale and high mortgage rates.
Existing home sales fell 3.4% in April from March to a seasonally adjusted annual rate of 4.28 million, the National Association of Realtors said Thursday. That’s slightly less than economists had expected, according to FactSet.
Turnover decreased by 23.2% compared to April last year. The annual decline was strongest in markets in the western part of the country, where sales fell more than 30% year-on-year.
The national median home price fell 1.7% from April last year to $388,800, according to the NAR. That is the largest annual average house price fall since January 2012.
The US housing market has not yet recovered from a slump that began just over a year ago, when the average 30-year mortgage rate began to rise from ultra-low levels, eventually doubling to just over 7% by the fall .
That home loan benchmark rate tends to track movements in 10-year Treasury yields, which rose sharply last year as bond investors reacted to the Federal Reserve aggressively raising its key lending rate – the central bank’s main tool against four-decade high inflation .
The average interest rate on a 30-year home loan has largely fallen in recent weeks and has hovered around 6.3% since the beginning of March. That is still about 1.5% higher than a year ago.
When mortgage rates rise, they can add hundreds of dollars a month in home buyer costs on top of already high home prices.
The increased rates and stubbornly low supply of homes on the market have forced many potential homebuyers to the sidelines over the past year, resulting in a lackluster start to the spring home buying season.
In the first four months of 2023, existing home sales are about 27% below the pace of last year in the same trajectory. Sales are down 33% from their most recent peak in January 2022.
The shortage of homes for sale has kept the market competitive, sparking bidding wars in many markets, especially for the most affordable homes.
All told, there were 1.04 million homes on the market at the end of April, up 7.2% from the previous month and up 1% from April last year, the NAR said.
That equates to a supply for 2.9 months at current selling rates, an improvement from 2.6 months in March and 2.2 months a year ago. Still, in a more balanced market between buyers and sellers, there is a 5 to 6 month supply.
