In April, the sales of previously owned homes decreased by 1.9% from March to 4.14 million units, according to the National Association of Realtors. This was a surprise as forecasts had predicted a slight gain. Sales were also down by 1.9% from April 2023. These sales represent closings that were likely based on contracts signed in February and March. Mortgage rates increased at the beginning of February and remained around 7% for the following two months before rising even higher in April. Lawrence Yun, the chief economist for the Realtors, noted that the 300 basis point increase in mortgage rates from pre-Covid levels could potentially restrict home sales.
At the end of April, total housing inventory stood at 1.21 million units, reflecting a 9% increase from the previous month and a 16% increase from the previous year. Despite this rise in inventory, there was only a 3.5-month supply at the current sales pace, which is considered low. A balanced ratio between buyers and sellers is typically achieved when there is a six-month supply. The supply of homes priced at over $1 million notably increased by 34% year over year, making this segment of the market more active. On the other hand, sales of homes priced below $100,000 dropped by 7.1% compared to the previous year, while sales of homes priced over $1 million witnessed a significant 40% jump.
Due to limited supply, home prices continued to be under pressure, with the median price of an existing home in April reaching $407,600, marking a 5.7% increase from the previous year. This also represented a new record high price for the month of April. Strong demand led to 27% of homes being sold above their list price, indicating a competitive market. Lawrence Yun mentioned that while the high prices are positive news for homeowners, the pace of price increases is expected to slow down as more housing inventory becomes available. First-time buyers made a slight comeback, accounting for 33% of April sales, up from 29% the previous year. The all-cash share of transactions remained relatively high at 28%.
In terms of geographic regions, sales in the Northeast decreased by 4% from March and 4% from April 2023, with a median price of $458,500, reflecting an 8.5% increase from the previous year. In the Midwest, sales dropped by 1% both month to month and year over year, with a median price of $303,600, up by 6% compared to April 2023. Sales in the South also declined, with a 1.6% drop from March and a 3.1% decrease from the previous year. The median price in the South was $366,200, showing a 3.7% increase from last year. Lastly, sales in the West decreased by 2.6% for the month but rose by 1.3% from one year before, with a median price of $629,600, reflecting a 9.3% increase from April 2023.
