Monkey Business / Adobestock
For the third consecutive month, existing-home sales declined, according to the National Association of Realtors (NAR). In April, two of the four major sales regions in the country experienced month-over-month sales gains, while two recorded losses. Yet when it came to year-over-year sales, every region saw sales declines. Lawrence Yun, chief economist for NAR, believed that higher home prices and mortgage rates led to a reduction in buyer activity. “It looks like more declines are imminent in the upcoming months,” he added, “and we’ll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years.”
Inventory Lower Than Last Year
After years of record-low inventory levels, the nation’s housing supply has started to improve, though the pace is slow. At the end of April, there were 1,030,000 units available for sale, up 10.8% from March but down 10.4% from April 2021. At the current sales pace, this supply would last just 2.2 months, up from 1.9 months a month ago but down from 2.3 months a year ago. This fast sales pace led to a contradiction in the housing market, according to Yun. “The market is quite unusual as sales are coming down, but listed homes are still selling swiftly, and home prices are much higher than a year ago.”
Home Prices Are up but Properties Are Selling Quickly
Prices increased across the country, with the median existing-home price climbing to $391,200, up 14.8% from a year ago. This marked the 122nd consecutive month of year-over-year price increases—the longest streak on record. The average property remained on the market for just 17 days in April, unchanged from both a month ago and a year ago. Of all the homes sold in April 2022, 88% were available for less than 30 days.
Who’s Buying?
“An increasing number of buyers with short tenure expectations could opt for five-year adjustable-rate mortgages, thereby assuring fixed payments over five years because of the rate reset,” according to Yun, who also suggested that the number of cash buyers, who are not impacted by mortgage rate changes, remained elevated. In April, 26% of transactions were all cash, down from 28% in March but up from 25% in April 2021. Individual investors or second-home buyers, who account for most cash sales, accounted for 17% of all home purchases, down from 18% a month ago and unchanged from a year ago. First-time buyers, meanwhile, represented 28% of homebuyers, down from 30% in March and 31% in April 2021.
Regional Breakdown
Northeast: Existing-home sales annual rate of 670,000; an increase of 1.5% from March 2022 but a decrease of 10.7% from April 2021. The median sales price of $412,100 increased 8.1% from April 2021.
Midwest: Existing-home sales annual rate of 1.31 million; an increase of 3.1% from March 2022 but a decrease of 1.5% from April 2021. The median sales price of $282,000 increased 8.7% from April 2021.
South: Existing-home sales annual rate of 2.49 million; a decrease of 4.6% from March 2022 and 5.7% from April 2021. The median sales price of $352,100 increased 22.2% from April 2021.
West: Existing-home sales annual rate of 1.14 million; a decrease of 5.8% from March 2022 and 8.1% from April 2021. The median sales price of $523,000 increased 4.3% from April 2021.
