Sales of existing homes in the United States fell for the third straight month in April as the housing market continued to cool off amid steep mortgage rate increases.
Total sales declined to 5.61 million on the month, down by 2.4% compared to March and by 5.9% from a year ago, according to data released by the National Association of Realtors on Thursday. Declines were reported for both single-family homes and condominiums.
That decline did not stop prices from reaching a record high in April, though, mostly because of seasonal effects. The year-over-year change in median home prices fell slightly in April, in line with earlier estimates for peak inflation already taking place in March.
The continuing drop in sales reaffirmed our estimate for a sharp decline in demand this year as the Federal Reserve raises interest rates.
Coupled with data for pending home sales—a proxy for future sales within two months—there is strong reason to expect that sales of existing homes will continue to fall back to the pre-pandemic level.
Slower demand helped the supply of existing homes pick up for the third month in a row, sitting at 2.2 months at the current selling pace.
Yet prices continued to inch higher in April, reaching $397,600 for the median price of both single-family homes and condominiums. That number is not adjusted for seasonal effects. Compared to last April, the median price was up by 14.8%, slightly lower than the 15% increase in March and February.
While that is certainly an encouraging sign, home prices remain elevated, leaving many first-time buyers priced out of the market. Although the share of first-time buyers ticked up slightly in April to 29%, it is still lower than 31% a year ago. The share of investors and all-cash buyers fell to 19% and 25%, respectively.
