May
Home sales declined in April for the second consecutive month, as high mortgage rates and near-record home prices continued to dampen the market during the prime selling season. Sales of previously owned homes fell by 1.9% from the previous month. The seasonally adjusted annual rate reached 4.14 million, according to the National Association of Realtors (NAR) on Wednesday.
Unexpected Decline Surprises Analysts
This decline caught housing analysts off guard, according to Barron’s report. Economists polled by The Wall Street Journal had anticipated a 1.4% increase in sales of previously owned homes for April compared to March. High mortgage rates are constraining the spring season, typically the busiest time of the year for the housing market. In March, existing-home sales saw their largest monthly drop in over a year.
Low Inventory and High Prices Create Challenges
A low inventory of homes for sale is also hindering buyers. Elevated rates have led many homeowners to stay put. At the end of April, at the current sales pace, the market had a 3.5-month supply of homes. This is below the four to six months’ supply generally considered balanced between buyers and sellers. This shortage is driving prices higher. The national median existing-home price rose by 5.7% in April from a year earlier to $407,600, NAR reported. This marked the highest price for any April since data collection began in 1999 and was close to the record high of $413,800. Prices are not adjusted for inflation.
Affordability Issues Frustrate Home Buyers
“Record-high home prices are hitting affordability,” said Lawrence Yun, NAR’s chief economist. “For a home buyer, it is a very frustrating market out there.” On an annual basis, existing home sales were down 1.9% in April. These sales constitute most of the housing market and were predominantly based on contracts signed in March and February.
Mortgage Rates Remain High
Mortgage rates have decreased this month. However, the average rate on a standard 30-year fixed mortgage remains above 7%, based on last week’s data from Freddie Mac. According to economists and real estate agents. Some homeowners who had been waiting for lower borrowing rates before selling their homes can no longer wait.
Personal Stories Highlight Market Conditions
Alexandra Perkinson and Brian Russman felt drawn to the natural beauty of Asheville, N.C. This prompted them to sell their Florida home and move. Even though it meant giving up a 4.375% mortgage rate for a higher one. “We kind of acknowledged that it’s not the best time,” Perkinson said. “But we just wanted to move and we didn’t want to put our life on hold.” The couple purchased a house in North Carolina in April and sold their Florida home this month. They hope to refinance at the end of next year. “We are excited about a new chapter,” Perkinson said.
Opportunities Amidst the Challenges
The number of homes for sale or under contract at the end of April rose 16.3% from a year earlier, NAR noted. This provided home shoppers with better opportunities. They were relocating for new jobs, needed more space, or had other reasons to move. Despite the challenges, the housing market continues to present possibilities for those able to navigate the current conditions.
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