April existing home sales drop in third straight months of declines

Sales of existing homes fell 2.7% in April from March at a seasonally adjusted annual rate of 5.85 million units, according to the National Association of Realtors.

This is the third consecutive month of decline, the group said.

Sales were 33.9% higher than in April 2020, but that comparison is an anomaly because the housing market and economy closed at the start of the pandemic. Housing then surged again last summer. Sales are still up 11% compared to April 2019.

“I would say it’s hot, that’s a one-word description even as sales decline,” said Lawrence Yun, chief economist at Realtors. For each list there are 5.1 offers. Half of the homes are selling above list price. “

The supply of homes for sale at the end of April fell by 20%. There are 1.16 million homes for sale, representing a 2.4-month supply at current sales rates.

High demand and bottoming out supply continue to push prices higher. The median price of an existing home sold in April was $341,600, up 19.1% from April 2020. This is both the highest median price on record and the largest annual increase. is recognized.

Much of that large average price increase was due to a mix of homes for sale. There is more activity in the high-end market, where supply is more abundant, and very little activity in the low-end, where shortages are most severe.

For example, sales of homes priced between $100,000 and $250,000 were flat from a year earlier. Sales of homes priced between $750,000 and $1 million were up 146%% from a year earlier, and sales of homes over $1 million were up 212%.

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Competition is fierce, too, with homes selling in just 17 days, the fastest pace Realtors have ever recorded. The percentage of all-cash sales has increased to 25% from 13% a year ago. Investors accounted for 17% of all trades. First-time buyers accounted for 31% of purchases, down slightly from a month earlier.

Mortgage rates in February and March, when these deals were signed, rose rapidly and dramatically. The average 30-year fixed rate starting in February is about 2.80% and ending in March is about 3.42%, according to Mortgage News Daily. That has taken away buying power from buyers, who already have to compete with high prices.

New-build home sales, as measured by signed contracts, not closings, surged 21% in March compared with February. Builders are benefiting from a lack of existing homes for sale, but new home prices are also rising sharply.

Builders have not increased production enough to meet all demand, as they are hampered by rising land and material costs and increasingly difficult labor shortages. The hope now is that with more vaccinations and people feeling better about socializing, more potential sellers will list their homes.

Danielle Hale, chief economist at realtor.com, said: “Increasing seller sentiment could mean perhaps a larger-than-normal share of homeowners entering the market. later this year. “While it won’t be enough to end the shortage of homes for sale, this wave of sellers will create a slump, giving homebuyers more options.”

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