Sales of previously owned homes declined by 1.9% in April to 4.14 million units, falling short of expectations for a slight increase. This 1.9% drop was also seen from April 2023, indicating a slowdown in the housing market. This decline in sales can be attributed to the jump in mortgage rates at the beginning of the year, which reached 7% and continued to rise in April, hitting a 300 basis point increase from pre-Covid levels. Lawrence Yun, chief economist for the National Association of Realtors, noted that these higher mortgage rates may have a restraining effect on home sales due to the new territory they have entered.
The total housing inventory at the end of April was 1.21 million units, showing a 9% increase from the previous month and a 16% increase from the previous year. Despite this rise in inventory, there is still a tight supply with only a 3.5-month supply at the current sales pace, well below the six-month supply considered balanced for buyers and sellers. The supply of homes priced at over $1 million saw a notable increase of 34% year over year, leading to increased activity in that segment of the market. Conversely, sales of homes priced below $100,000 saw a 7.1% decrease year over year, highlighting the disparities in the housing market.
Due to tight supply, home prices continued to increase, reaching a median price of $407,600 in April, marking a 5.7% year-over-year increase. With strong demand leading to multiple offers, 27% of homes were sold above the list price. Lawrence Yun emphasized that while reaching record-high prices for April is good news for homeowners, the pace of price increases is expected to taper off as more housing inventory becomes available. First-time buyers saw a slight increase, accounting for 33% of April sales, up from 29% the previous year. The all-cash share remained relatively high at 28% of all transactions.
Regionally, sales varied with the Northeast seeing a 4% decline in sales from both March and the previous year, with a median price of $458,500, reflecting an 8.5% year-over-year increase. In the Midwest, sales dropped by 1% month over month and year over year, with a median price of $303,600, up 6% from April 2023. Sales in the South fell by 1.6% from March and 3.1% from the previous year, with a median price of $366,200, up 3.7% year over year. The West experienced a 2.6% decrease in sales from the previous month but a 1.3% increase from one year before, with a median price of $629,600, marking a 9.3% year-over-year increase.
In summary, the housing market in April saw a decline in previously owned home sales, largely influenced by the increase in mortgage rates earlier in the year. Despite an increase in total housing inventory, supply remains tight, leading to continued price increases. While record-high prices for April are positive for homeowners, there is an expectation that the pace of price growth will slow down as more inventory becomes available. Regional variations in sales and median prices show a diverse market landscape across different parts of the country.
