Existing-Home Sales Edged Lower by 0.5% in April

Existing-home sales edged down 0.5% in April to a seasonally adjusted annual rate of 4.00 million, representing a 2.0% year-over-year decline, while the median sales price rose 1.8% to $414,000, marking the 22nd consecutive month of price increases and an all-time high for April. Inventory levels saw a significant increase, jumping 9.0% from the previous month to 1.45 million units, equating to a 4.4-month supply; however, NAR Chief Economist Lawrence Yun suggests pent-up demand remains, contingent on mortgage rate declines.

Analysis

Existing-home sales in April experienced a slight contraction, falling 0.5% month-over-month and 2.0% year-over-year to a seasonally adjusted annual rate of 4.00 million units, highlighting that sales volumes remain approximately 25% below pre-pandemic activity levels, as noted by NAR's Chief Economist, despite significant job growth. Conversely, the median existing-home sales price continued its upward trajectory, rising 1.8% year-over-year to $414,000, an all-time high for April and the 22nd consecutive month of annual price appreciation. A key development is the substantial increase in housing inventory, which surged 9.0% from March and 20.8% from April 2024 to 1.45 million units, equating to a 4.4-month supply – the highest level in nearly five years. This inventory growth, alongside 30-year fixed mortgage rates averaging 6.81% as of mid-May, suggests a potential easing of the stark seller's market, potentially offering buyers improved negotiating leverage, although NAR Chief Economist Lawrence Yun posits that substantial pent-up demand could be unlocked by any meaningful decline in these rates. Regional performance varied: sales fell 2.0% in the Northeast and 3.9% in the West month-over-month, while growing 2.1% in the Midwest and remaining unchanged in the South; year-over-year median price changes ranged from a 6.3% increase in the Northeast to a 0.2% decrease in the West. First-time homebuyers increased their market share to 34% in April, up from 32% in March, while cash sales moderately decreased to 25% of transactions and investor purchases represented 15% of homes.

Key Decisions for Investors

• Monitor the growing housing inventory, as its continued rise to a near five-year high (4.4 months' supply) could temper price growth and shift market dynamics, despite the current 1.8% year-over-year median price increase.
• Evaluate the housing market's sensitivity to mortgage rates, currently around 6.81%, as NAR's Chief Economist suggests significant pent-up demand may be released if rates decline meaningfully, potentially offsetting the impact of higher inventory.
• Note regional divergences in performance; while national median prices rose, the South and West saw minor year-over-year median price decreases (-0.1% and -0.2% respectively), contrasting with appreciation in the Northeast (+6.3%) and Midwest (+3.6%), indicating varied sub-market conditions.