According to the National Association of Retailers, sales of previously owned homes fell to the lowest level since the Covid pandemic started.
The group said existing- home sales fell 2.4% in March to a rate of 5.61 million units. In April 2021, sales were 5.9% lower. Since the economy was struggling with the coronaviruses, the rate was artificially slow.
The count reflects contracts signed in February and March, when mortgage rates were rising. According to Mortgage News Daily, the average rate on the 30-year fixed mortgage ended in March at 4.78 percent. It is currently around 5.45%.
We are moving back to pre-pandemic sales activity, but I expect further declines, because rates are now higher than they were when these contracts were signed.
The buyers had to contend with rising rates and the shortage of homes for sale. At the end of April, there were 1.03 million homes for sale, which is down from April 2021. A 2.2-month supply is the current sales pace.
Home prices increased despite rising interest rates. The median price of an existing home sold in April was $391,200, the highest on record and an increase of 14.8% from a year ago.
Sales are more robust at the higher end of the market, which leads to the skewed median. Sales of homes priced between $100,000 and $250,000 fell 29% while those priced between $500,000 and $750,000 rose 19%. Sales of homes over $1 million increased by 16%.
The average home is on the market for 17 days before going under contract. 25% of all sales were all-cash. First-time buyers made up just 28% of the sales. Roughly 40% of the market has been made up of first-time buyers.
Despite waning confidence that is a good time to buy, the number of households interested in becoming homeowners remains high. Danielle Hale, chief economist for Realtor.com, said that younger home shoppers are struggling to save for a down payment as rents continue to hit records.
Sales of newly built homes will be reported next week, but mortgage applications for those homes dropped during the month compared with the previous year, according to the Mortgage Bankers Association.
New home purchase activity declined on a monthly and annual basis in April, as the spike in mortgage rates cooled demand, and homebuilders continued to grapple with rising costs, supply-chain issues, and extended completion timelines.
New home sales will fall for the fifth month in a row, according to the MBA.
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