April’s existing home sales fell 2.5% month-over-month and 1.4% year-over-year, according to the National Association of Realtors‘ monthly report.
NAR Chief Economist Lawrence Yun said this is due to the woeful lack of inventory.
“The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home,” Yun said in a statement.
“Realtors say the healthy economy and job market are keeping buyers in the market for now even as they face rising mortgage rates. However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford,” he added.
According to the release, last year at this time the median home price was $245,000. This year it is $257,900. That translates to 5.3% YoY increase in the median home price and marks the 74th consecutive month of YoY gains.
Zillow Senior Economist Aaron Terrazas says continued stagnation is what’s on the menu for home buying because low supply will continue to kneecap potential homebuyers’ ability to purchase a reasonably priced home. This is sad news for the industry because according to Terrazas the demand is there.
“Inventory has fallen on an annual basis for almost three straight years, especially among the kind of entry-level homes likely to be sought by first-time buyers, which makes it difficult to sell homes in large numbers. And the price of existing homes has been climbing for six straight years…the affordability problem remains incredibly challenging: mortgage rates aren’t going to come down; prices aren’t going to fall in the face of intense demand; and income growth, while steady, is unlikely to meaningfully pick up any time soon,” Terrazas said in a statement.
“Declining inventory, deteriorating affordability, stagnant sales volumes and unmet demand look to be the hallmarks of the existing home market for some time to come,” Terrazas added.