Existing home sales decreased in April
The US National Association of Realtors (or NAR) releases a monthly report on the existing home sales (ITB) market. This report contains the trends in existing housing inventory, total housing inventory, median home prices, and mortgage rates. The changes to existing home sales data over a period help investors understand the trends in the secondary housing market (REM).
As per the latest report from the NAR, existing home sales have fallen 2.5% to a seasonally adjusted annual rate of 5.45 million homes in April compared to 5.60 million homes in March. Sales are now 1.4% below their level in the previous year.
Reason for the sales fall
The primary reason for the fall in existing home sales was the unavailability of properties. Going forward, rising interest rates are also likely to affect the existing home sales market, as the average commitment rate for a 30-year mortgage increased for the seventh straight month to 4.47% from 4.44% in March, moving close to the September 2013 high of 4.49%.
Lawrence Yun, NAR’s chief economist, said that existing home sales remained low because of a lack of available listings to meet demand. He said that a healthy job market and a healthy economy are helping limit the effects of rising rates.
Price and inventory trends in the housing market
Housing prices in the United States have increased for 74 consecutive months year-over-year. The median existing home price (FTY) across the United States in April was $259,000, up 5.3% from the same period in the previous year. Total housing (EQR) inventory has increased 9.8% to 1.9 million listings but is still lagging the previous year’s inventory by 6.3%.
First-time buyers made up 33% of April sales, while 57% of total units sold in March stayed on the market for fewer than 30 days, indicating that the existing home sales market is getting hot, and the April decline was a supply-side issue. In the next part of this series, we’ll analyze the decline of new home (IYR) sales in April.