Existing Home Sales Fall for Third Month as Buyers Say ‘No Thanks’

    Existing home sales declined for the third month in a row in April, down 2.4 percent from the previous month and 5.9 percent from a year earlier, as homebuyers shy away in the face of lower affordability as a result of higher home prices and mortgage rates.

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

    Lawrence Yun | Image credit: NAR

    “High home prices and sharply higher mortgage rates have dampened buyer activity,” NAR Chief Economist Lawrence Yun said in a statement. “More declines appear to be imminent in the coming months, and we will likely return to pre-pandemic home sales activity after a marked uptick over the past two years.”

    However, lower home sales mean inventory is receiving a modest boost, which puts some buyer’s agents at ease. Total inventory increased 10.8 percent from March 2022, but declined 10.4 percent year-over-year to 1.03 million units. At the current sales pace, this results in 2.2 months of inventory, up from 1.9 months in March 2022 and down from 2.3 months in April 2021.

    Despite declining numbers of existing home sales, properties on the market continued to sell quickly, Yoon said, creating a strange dynamic in the market.

    “The market is quite unusual with sales dropping, but listed homes are still selling quickly, and home prices are much higher than they were a year ago,” Yoon said. Moreover, an increasing number of buyers with short tenure expectations can opt for 5-year adjustable rate real estate loans, thus ensuring stable payments over five years due to the rate reset. Cash buyers, unaffected by changes in the mortgage rate, remain at a high level.”

    The median price of existing homes in all housing types increased 14.8 percent year on year, from $340,700 in April 2021 to $391,200 in April 2022. The continuous annual rise in prices over the past 122 months in a row has been the longest streak on record.

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

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

    All cash sales accounted for 26 percent of all transactions, down from 28 percent in the previous month and up from 25 percent in April 2021.

    The number of individual investors (often cash buyers) didn’t 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 out there in April 2021.

    Troubled sales accounted for less than 1 percent of total sales in April, which was unchanged from March, and down from 2 percent a year earlier.

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

    According to the type of house

    Sales of single-family homes fell 2.5% from a seasonally adjusted annual rate of 5.12 million in March to 4.99 million in April. Single-family sales also fell 4.8 percent year on year. The median current single-family home price increased 14.8 percent year-over-year to $397,600.

    Existing condominium and co-op sales are 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 average current apartment price is up 13.1 percent year over year to 340 one thousand dollars.

    by region

    Existing home sales were broken down across the four main regions in terms of increasing or decreasing sales.

    The West saw the biggest drop 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 average price rose 4.3 percent year over year to $523,000.

    In the South, existing home sales fell 4.6 percent from March and fell 5.7 percent year-over-year to an average of 2.49 million. The average price was up 22.2 percent year over year to $352,100. This average price hike was the eighth consecutive month in which the South saw the highest rate of rise compared to other regions.

    Existing home sales increased 3.1 percent month over month, but fell 1.5 percent year on year in the Midwest to an annual rate of 1.31 million. The average price increased 8.7 percent year over year to $282,000.

    Existing home sales in the Northeast rose a modest 1.5 percent from March and fell 10.7 percent year on year to an annual rate of 670,000. Meanwhile, the average price rose 8.1 percent year-over-year to $412,100.

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