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Existing-home sales posted their third consecutive month of declines despite soaring home buyer demand nationwide. Despite record-high home prices, buyers remain active in the market, but the lack of homes for sale is constraining activity.
However, a turnaround to ongoing inventory woes could be on the horizon, said Lawrence Yun, chief economist of the National Association of REALTORS®.
Existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—fell 2.7% in April compared to March, reaching a seasonally adjusted annual rate of 5.85 million, NAR reported on Friday.
Despite the drop, home sales remain nearly 34% higher than a year ago.
Home prices continue to rise. The median existing-home sales price jumped 19.1% year over year to $341,600—record highs, NAR reports. All four major regions posted a double-digit year-over-year increase in April.
“Home sales were down again in April from the prior month, as housing supply continues to fall short of demand,” said Yun. “We’ll see more inventory come to the market later this year as further COVID-19 vaccines are administered and potential home sellers become more comfortable listing and showing their homes. The falling number of homeowners in mortgage forbearance will also bring about more inventory.”
Housing demand remains strong. Yun pointed to home sales from January to April that are up 20% compared to that period in 2020.
“The additional supply projected for the market should cool down the torrid pace of price appreciation later in the year,” he said.
Here’s a closer look at existing-home sales from April, according to NAR’s latest report:
Home prices: The median existing-home price for all housing types in April reached a record high of $341,600, up 19.1% from April 2020 ($286,800).
Housing inventory: Total housing inventory remains near record lows. At the end of April, 1.16 million units were on the market, down 20.5% from a year ago. Unsold inventory is at a 2.4-month supply at the current sales pace.
Days on the market: Eighty-eight percent of the homes sold in April 2021 were on the market for less than a month. Properties typically remained on the market for 17 days in April, down from 27 days a year ago.
First-time buyers: First-time buyers comprised 31% of sales in April, down from 36% a year earlier. “First-time buyers in particular are having trouble securing that first home for a multitude of reasons, including not enough affordable properties, competition with cash buyers, and properties leaving the market at such a rapid pace,” Yun said.
Investors and second-home buyers: Individual investors and second-home buyers purchased 17% of homes in April, up from 10% in April 2020. Investors and second-home buyers tend to make up the bulk of all-cash sales, which accounted for 25% of transactions in April, up from 15% a year earlier.
Regional Breakdown
Here’s how existing-home sales fared across the country last month:
- Midwest: The Midwest was the only region that posted higher sales in April. Existing-home sales increased 0.8% to an annual rate of 1.29 million, a 13.2% increase from a year earlier. The median price was $259,300, a 13.5% rise from April 2020.
- Northeast: Existing-home sales dropped 3.9% in April from March, but the annual rate of 730,000 represents a 30.4% jump from a year ago. The median price was $381,100, up 22% from April 2020.
- South: Existing-home sales fell 3.7%, reaching an annual rate of 2.6 million in April. Sales are up 39.0% from a year earlier. The median price was $289,600, a 15.8% jump from a year ago.
- West: Existing-home sales dropped 3.1% from the month prior, reaching an annual rate of 1.23 million in April--a 53.8% surge from a year ago. The median price was $501,200, up 19.9% from April 2020.
