Existing Home Sales Are Decreasing

Existing-home sales declined for the third-consecutive month in April, decreasing by 2.4 percent from the previous month and by 5.9 percent from the year before as homebuyers turned away in the face of declining affordability as a result of rising home prices and mortgage rates.

Total existing-home sales decreased to a seasonally adjusted annual rate of 5.61 million in April 2022, down from 5.96 million the year before, according to data released Thursday by the National Association of Realtors.

“Higher home prices and sharply higher mortgage rates have reduced buyer activity,” NAR Chief Economist Lawrence Yun said in a statement. “It looks like more declines are imminent in the upcoming months, and we’ll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years.”

Declining home sales, however, means inventory is receiving a modest boost, to the relief of some buyers agents. Total inventory was up 10.8 percent from March 2022, but down 10.4 percent year over year to 1.03 million units. At the current sales pace, that yields a 2.2-month supply of inventory, up from 1.9 months in March 2022 and down from 2.3 months in April 2021.

Despite decreasing numbers of existing-home sales, properties that go on the market have continued to sell quickly, Yun said, creating an odd dynamic in the marketplace.

“The market is quite unusual as sales are coming down, but listed homes are still selling swiftly, and home prices are much higher than a year ago,” Yun said. “Moreover, an increasing number of buyers with short tenure expectations could opt for 5-year adjustable-rate mortgages, thereby assuring fixed payments over five years because of the rate reset. The cash buyers, not impacted by mortgage rate changes, remain elevated.”

The median existing-home price across all housing types increased 14.8 percent year over year, from $340,700 in April 2021 to $391,200 in April 2022. The sustained annual price appreciation over the last 122 consecutive months has been the longest-running streak on record.

Homes stayed on the market for the same length of time as in March 2022 and April 2021, typically 17 days. Nearly 90 percent of homes on the market in April 2022 sold in less than a month.

The proportion of first-time buyers in the market waned this month, dropping from 30 percent of all sales in March 2022 to 28 percent in April 2022. In April 2021, first-time buyers made up 31 percent of all sales.

All-cash sales made up 26 percent of all transactions, down from 28 percent the month prior and up from 25 percent in April 2021.

The number of individual investors (who are often all-cash buyers) did not change much, making up 17 percent of home sales in April, down from 18 percent the previous month, but equal to the proportion of all-cash buyers present in April 2021.

Distressed sales made up less than 1 percent of all sales in April, which was unchanged from March, and down from 2 percent the year before.

The average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.98 percent in April, up from 4.17 percent the month prior, and well up from the average commitment rate in 2021 of 2.96 percent, according to Freddie Mac.

Single-family home sales dropped 2.5 percent from a seasonally adjusted annual rate of 5.12 million in March to 4.99 million in April. Single-family sales were also down 4.8 percent year over year. The median existing single-family home price was up 14.8 percent year over year to $397,600.

Existing condo and co-op sales were down 1.6 percent from March and down 13.9 percent year over year to a seasonally adjusted annual rate of 620,000 units in April 2022. The median existing condo price was up 13.1 percent year over year to $340,000.
By region

Existing-home sales were split across the four major regions in terms of increasing or declining sales.

The West saw the greatest decrease from the previous month, dropping 5.8 percent month over month and 8.1 percent year over year to an annual rate of 1.14 million in April. The median price was up 4.3 percent year over year to $523,000.
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In the South, existing-home sales declined 4.6 percent from March and dropped 5.7 percent year over year to a rate of 2.49 million. The median price was up 22.2 percent year over year to $352,100. That rise in median price marked the eighth consecutive month where the South saw the highest pace of appreciation compared to other regions.

Existing-home sales increased 3.1 percent month over month, but dropped 1.5 percent year over year in the Midwest to an annual rate of 1.31 million. The median price was up 8.7 percent year over year to $282,000.

Northeast existing-home sales rose a modest 1.5 percent from March and dropped 10.7 percent year over year to an annual rate of 670,000. Meanwhile, the median price increased 8.1 percent year over year to $412,100.