US Existing-Home Sales Unexpectedly Fall, Prices Stay High

Summary:

US Existing-Home Sales Dip Amid Record-High Prices and Elevated Mortgage Rates

Sales of existing homes in the United States fell unexpectedly for the second consecutive month in April, indicating ongoing challenges in the housing market despite near-record prices and high borrowing costs. According to the National Association of Realtors (NAR), contract closings dropped by 1.9% to an annualized rate of 4.14 million, falling short of the 4.23 million median estimate in a Bloomberg survey of economists. The median selling price surged to $407,600, marking a record high for April. NAR Chief Economist Lawrence Yun highlighted that while rising home prices benefit homeowners, the rate of increase is expected to slow as more inventory becomes available.

The housing market’s sluggish recovery from a 13-year low in October is hampered by limited inventory, keeping prices elevated. In early 2021, annualized sales were more than 2 million above the current pace, with mortgage rates around 3%, compared to the present rate of 7%. Despite a slight increase in inventory, it remains significantly below pre-pandemic levels, with 1.21 million homes available for sale in April. This limited supply continues to drive up prices, further straining affordability for lower and middle-income buyers. The Federal Reserve’s stance on maintaining higher borrowing costs until inflation targets are met means relief may not be immediate, sustaining the current tight market conditions.

Our take (from the Straight to Smart newsletter):

Resist the Rate Cut Hype Part 2

Article Excerpt:

Sales of US existing homes unexpectedly fell for a second month in April, adding to evidence that the resale market is struggling for traction amid near-record prices and high borrowing costs.

Contract closings decreased 1.9% from a month ago to a 4.14 million annualized rate, according to National Association of Realtors data released Wednesday. The figure trailed the median estimate of 4.23 million in a Bloomberg survey of economists.

Click to read original Bloomberg article (subscription may be required):
US Existing-Home Sales Unexpectedly Fall, Prices Stay High

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