Sales of previously occupied U.S. homes fell again last month, more evidence that many prospective homebuyers are being held back by a persistently low inventory of homes for sale and elevated 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 below what economists were expecting, according to FactSet.
Sales sank 23.2% compared with April last year. The annual drop was steepest in markets across the Western part of the country, where sales plunged more than 30% from a year earlier.
The national median home price slipped 1.7% from April last year to $388,800 the NAR said. That’s the biggest annual median home price drop since January 2012.
The U.S. housing market has yet to emerge from a slump that started a little more than a year ago, when the average rate on a 30-year mortgage began to climb from ultra-low levels, eventually doubling to just over 7% by the fall.
That benchmark home loan rate tends to track the moves in the 10-year Treasury yield, which rose sharply last year as bond investors reacted to the Federal Reserve aggressively hiking its main borrowing rate -- the central bank’s main tool against four-decade high inflation.
The average rate on a 30-year home loan has mostly edged lower in recent weeks, hovering around 6.3% since early March. That’s still around 1.5% higher than a year ago.
When mortgage rates rise they can add hundreds of dollars a month in costs for homebuyers on top of already high home prices.
The elevated rates and stubbornly low inventory of homes on the market have forced many would-be homebuyers to the sidelines during the past year, resulting in a lackluster start to the spring homebuying season.
Through the first four months of 2023, existing home sales are running about 27% below the pace in the same stretch last year. Sales are down 33% from their most recent peak in January 2022.
The shortage of homes for sale has kept the market competitive, driving bidding wars in many markets, especially for the most affordable homes.
All told, there were 1.04 million homes on the market by the end of April, up 7.2% from the previous month and up 1% from April last year, the NAR said.
That amounts to a 2.9-month supply at the current sales pace, an improvement over the 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.
