U.S. existing home sales dropped to the lowest level in nearly two years in April as house prices jumped to a record high amid a persistent lack of inventory.
Existing home sales fell 2.4% to a seasonally adjusted annual rate of 5.61 million units last month, the lowest level since June 2020 when sales were rebounding from the COVID-19 lockdown slump. It was the third straight monthly sales decline.
Home resales, which account for the bulk of U.S. home sales, declined 5.9% on a year-on-year basis.
The bulk of April’s sales were likely closings on contracts signed one to two months ago before mortgage rates started their rapid ascent. A further decline in sales is likely as contracts decreased for the fifth straight month in March.
The median existing house price shot up 14.8% from a year earlier to an all-time $391,200 in April. The median house price surged 22% in the South, which had seen a rapid rise in sales as Americans moved from other regions.
Sales remained concentrated in the upper-price end of the market amid a paucity of entry-level houses.
There were 1.03 million previously owned homes on the market, down 10.4% from a year ago.
Supply is likely to remain tight. The government reported on Wednesday that building permits for single-family housing, the largest segment of the housing market, tumbled to a six-month low in April.
At April’s sales pace, it would take 2.2 months to exhaust the current inventory of existing homes, down from 2.3 months a year ago. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.
Properties typically remained on the market for 17 days, unchanged from the prior month and a year ago. Eighty-eight percent of homes sold in April were on the market for less than a month. First-time buyers accounted for 28% of sales. All-cash sales made up 26% of transactions.