The recent report from the National Association of Realtors revealed a 1.9% decrease in the sales of previously owned homes in April compared to March. This unexpected decline can be attributed to the significant increase in mortgage rates that started at the beginning of February. The continuous rise in rates, reaching 7% in April, has pushed potential buyers into a challenging position, affecting their purchasing power and ultimately slowing down the housing market.
The total housing inventory at the end of April increased by 9% month-over-month and 16% year-over-year. Despite this growth, the supply of homes remains limited, with only a 3.5-month supply at the current sales pace. This imbalance between supply and demand has exerted pressure on home prices, leading to a 5.7% year-over-year increase in the median price of existing homes, hitting a record high of $407,600 in April. Moreover, the surge in prices has resulted in 27% of homes selling above their list price, highlighting the fierce competition among buyers in the current market.
Regionally, the Northeast experienced a 4% decline in sales compared to March and April 2023, with the median price reaching $458,500, reflecting an 8.5% year-over-year growth. In the Midwest, sales dropped by 1% both month-over-month and year-over-year, while the median price rose to $303,600, up 6% from April 2023. The South saw a 1.6% decrease in sales from March and a 3.1% decline from the previous year, with the median price reaching $366,200, indicating a 3.7% increase from last year. Lastly, the West experienced a 2.6% sales decrease from the previous month but a 1.3% increase from a year earlier, with the median price jumping to $629,600, up 9.3% from April 2023.
First-time buyers accounted for 33% of home sales in April, marking a slight increase from the previous year. However, the all-cash transactions remained high at 28% of all transactions, indicating the presence of investors and cash buyers in the market. This mix of buyer types suggests a diverse landscape within the real estate market, with various factors influencing purchasing decisions and overall market dynamics.
While the current market conditions pose challenges for buyers, especially with rising mortgage rates and limited inventory, there are signs of hope for a more balanced market in the future. With more housing inventory becoming available, the pace of price increases is expected to taper off, providing relief to buyers while maintaining the overall stability of the real estate market. It will be crucial for buyers and sellers to adapt to these changing dynamics and navigate the market with caution to make informed decisions in the coming months.
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