After reaching a record high in October, existing home sales, as reported by the National Association of Realtors (NAR), dropped to a ten-month low in April, as tight inventory continues to limit sales and fuel home price growth. The median existing home price in April surged to an all-time high and was the largest annual pace on record.
Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, fell 2.7% to a seasonally adjusted annual rate of 5.85 million in April, the lowest level since July 2020. However, on a year-over-year basis, sales were still 33.9% higher than a year ago.
The first-time buyer share rose to 31% in April, down from 32% in March and 36% a year ago. However, price gains threaten this submarket in the future. The April inventory level increased slightly from 1.05 to 1.16 million units but is still down from 1.46 million units a year ago.
At the current sales rate, the April unsold inventory sit at a 2.4-month supply, slightly up from March’s 2.1-month but still down from 4.0-month a year ago. This low level supply of resale homes is good news for home construction.
Homes stayed on the market for an average of just 17 days in April, an all-time low, down from 18 days in March and 27 days a year ago. In April, 88% of homes sold were on the market for less than a month.
The April all-cash sales share was 25% of transactions, up from 23% last month and 15% a year ago.
Tight supply continues to push up home prices. The April median sales price of all existing homes was $341,600, up 19.1% from a year ago, representing the 110th consecutive month of year-over-year increases. The median existing condominium/co-op price of $300,400 in April was up 12.6% from a year ago.
Geographically, three of four regions saw a decline in existing home sales in April, ranging from 3.1% in the West to 3.9% in the Northeast. Sales in the Midwest slightly rose 0.8% in April. On a year-over-year basis, however, sales still grew by double-digits in all four regions, ranging from 13.2% in the Midwest to 53.8% in the West.
Meanwhile, the Pending Home Sales Index (PHSI), also reported by the NAR, is a forward-looking indicator based on signed contracts. The PHSI rose 1.9% from 109.2 in February to 111.3 in March. On a year-over-year basis, sales were 23.3% higher than a year ago.
Though consumers are facing higher home prices and declining housing affordability, housing demand is expected to remain solid due to historically favorable mortgage rates and a promising economic outlook. Meanwhile, rising lumber prices and supply chain issues are limiting builders’ abilities to meet the increased level of demand. The imbalance between housing supply and demand could hamper future sales by driving up house prices and eroding affordability.