Last month, U.S. home sales continued their slide that began in January 2022 and reversed only for a month—in February this year—before resuming their decline.
The number of monthly sales has fallen by about a third since 1 January 2022.
The number of homes sold in April was off 3.4 percent from March and 23.2 percent from a year earlier, according to the National Association of Realtors (NAR).
Prices declined at an annual rate of 1.7 percent, a pace not seen since January 2012, the NAR said.
April’s median sale price was $388,800, down from a peak of $413,800 last June but rising from $371,200 in this year’s first quarter. Spring and summer are peak selling seasons and prices tend to be at their strongest.
Prices declined most in the western U.S. while prices rebounded in several metro areas in the east, as we previously reported in “Home Prices Fall in Almost a Third of U.S. Cities in First Quarter” (16 May 2023).
The year-plus contraction has been driven, in part, by the U.S. Federal Reserve’s steady increases in interest rates over the past 14 months.
That has made home ownership less affordable for first-time buyers and kept current owners clinging to low-rate mortgages they took out before rates began to climb.
The average national rate on a 30-year fixed-rate mortgage stood at 7.04 percent on 22 May, according to Bankrate.com. The rate was 3.22 percent on 1 January 2022 and had rocketed up to 7.08 percent by 1 November that year.
On 30 April, there were 1.04 million homes for sale or under contract, up 7.2 percent from March and 1 percent year on year.
That equates roughly to a 2.9-month inventory. The realty industry considers a six-month supply of homes to be a balanced market that gives buyer and seller equal leverage in negotiating price.
The number of homes newly listed in April dove 21 percent from a year earlier, Realtor.com said.
TREND FORECAST: Lower home prices and higher mortgage interest rates leave prospective buyers and owners hoping to trade homes no better off. In fact, many are in a worse position as higher mortgage rates more than cancel any reduction in a monthly payment that lower prices would have conferred.
The housing market will not spike again until either the Fed begins to dramatically cut interest rates—something it has pledged to not do this year—or when the U.S. falls into the coming full-blown recession. Again, as we have forecast, housing prices will decline, but they will not crash.