April home sales disappoint as higher mortgage rates weigh on buyers
Sales of previously owned homes were nearly flat in April from March, rising just 0.2% on a seasonally adjusted, year-over-year basis to 4.02 million units, according to the National Association of Realtors. Housing analysts were expecting a gain of over 3%.
April sales remained unchanged on a yearly basis. This number is based on closings, so contracts will likely be signed in late February and March. The average rate on a 30-year fixed mortgage ended in the high 5% range in March and then rose sharply due to the start of the U.S.-Israeli war with Iran, according to Mortgage News Daily.
“Despite mixed macroeconomic signals, including a record stock market and historically low consumer confidence, home sales increased modestly due to continued improvement in housing affordability,” NAR chief economist Lawrence Yun said in a statement. “Mortgage rates are lower than a year ago, and median income growth is outpacing home price increases.”
In April, stocks increased by 5.8% compared to March, but only increased by 1.4% compared to the previous April, reaching 4.4 months of supply. This rate is still considered tight as the six-month supply represents a balanced market between buyers and sellers.
“We really need to see 30% growth in inventory, but we’re not seeing that,” Yun said. “Although not as busy as a few years ago, there are still plenty of offers available. At the same time, days on market are getting longer on average, indicating that consumers are not rushing before making a decision.”
This caused prices to rise. The average price of a home sold in April was $417,700, up 0.9% from the previous year. This is the highest price NAR recorded in April.
The average number of days on market increased to 32 days in April, from 29 days in the same month last year. First-time shoppers represented 33% of sales for the month; This rate decreased slightly compared to a year ago. A quarter of all sales were in cash, unchanged from last year.
Mortgage rates continued their high course, starting this week at 6.42%. Other reports this month show that pending sales rose slightly in April and May, but supply is tightening again. This will continue to raise prices.
