High mortgage rates are really slowing down the spring home-selling season.
Home sales fell again in April for the second consecutive month, with high mortgage rates and near-record home prices stalling the market during the prime selling season.
The National Association of Realtors announced on Wednesday that sales of previously owned homes fell by 1.9% from the last month dropping to seasonally adjusted annual rate of 4.14 million.
Last month’s drop surprised housing analysts. Economists surveyed by The Wall Street Journal had predicted that sales of previously owned homes would increase a seasonally adjusted, 1.4% , in April compared to March.
Sales of Existing Homes in the U.S.
Seasonally adjusted at an annual rate; April 2024 figures are preliminary.
But high mortgage rates are constraining the spring season, which is typically the busiest period of year for the housing market. In March, existing-home sales saw their biggest monthly drop in more than a year.
The limited inventory of homes for sale is making it tough for buyers, since high rates have caused many homeowners to remain in their current situation. At the current sales pace, there was a 3.5-month supply of homes on the market at the end of April, which is less than the four to six months’ supply usually needed for a market balance between buyers and sellers.
The shortage is driving prices upwards. According to the National Association of Realtors the national median existing-home price increased by 5.7% in April compared to a year earlier at $407,600. This is the highest price for any April data since 1999 and is getting the record high of $413,800. Prices are not adjusted for inflation.
U.S. High Mortgage Rates median existing-home price compared to the previous year.
Lawrence Yun, chief of the National Association of Realtors, stated, “It is a very frustrating market out there, for a home buyers” due to the unaffordable, record-high home prices.
Annually, existing home sales dropped by 1.9% in April. Most of the housing market was made up by these sales, which usually consists of contracts signed in March and February.
High Mortgage rates have dropped this month. But, according to last week’s data from Freddie Mac, the average rate on the standard 30-year fixed mortgage remains above 7%.
According to economists and real-estate agents, some people who have been holding off selling their home and hoping to decrease the borrowing rates, can’t wait any longer.
Alexandra Perkinson and Brian Russman said they were attracted to the natural beauty of Asheville, N.C. So they decided to sell their home in Florida and relocate, despite having exchanged their 4.375% mortgage rate for a higher one.
Alexandra Perkinson and Brian Russman create a new home in Asheville, NC.
“We knew that it’s not the best time,” Perkinson said. “However, we really want to move, and we didn’t want to delay our plans anymore.”
The couple purchased a house in North Carolina in April and sold their Florida home this month. They plan to refinance by the end of next year. “We are really excited about this new chapter of our life,” Perkinson said.
According to the National Association of Realtors, the number of homes for sale or under contract at the end of April increased by 16.3% compared to the previous year. This provided better opportunities for home shoppers who were relocating for new jobs, required more spaces, or had other reasons to move.
Available Existing Homes for sale U.S.
According to Danielle Hale, chief economist at Realtor, “The longer high mortgage rates remain at these levels, the more people get used to them or just have life happen and need to move”.
