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Existing home sales declined 2.7% in April through March to a seasonally adjusted annual rate of 5.85 million units, according to the National Association of Realtors.
It was the third straight month of declines, the group said.
Sales were 33.9% higher than April 2020, but that comparison is an anomaly as the housing market and economy closed at the start of the pandemic. Housing construction then recovered strongly last summer. Sales were still 11% higher than in April 2019.
“I’d say it’s hot, that’s the only word description despite the drop in sales,” said Lawrence Yun, broker’s chief economist. There are 5.1 offers for each listing. Half of the houses are being sold above the list price. “
The supply of houses for sale fell by 20% at the end of April. 1.16 million homes have been offered for sale, which corresponds to a supply of 2.4 months at the current rate of sale.
The high demand and the low supply drove prices up further. The average price for an existing home sold in April was $ 341,600, up 19.1% from April 2020. This is both the highest average price in history and the largest annual increase in its history.
Much of this sharp rise in the average price is due to the mix of homes sold. There is far more activity at the higher end of the market, where the supply is plentiful, and very little activity at the lower end, where the shortage is greatest.
For example, house sales at prices between $ 100,000 and $ 250,000 remained unchanged from a year earlier. Sales of homes priced between $ 750,000 and $ 1 million increased 146% year over year, and home sales above $ 1 million increased 212%.
The competition is also incredibly intense. Homes are sold in just 17 days, the fastest real estate agents have ever seen. The cash share of sales rose from 13% a year ago to 25%. Investors made up 17% of all transactions. First-time buyers accounted for 31% of purchases, a slight decrease from the previous month.
Mortgage rates rose rapidly and dramatically in February and March when these contracts were signed. The average interest rate on the 30-year fix started at 2.80% in February and ended at 3.42% in March, according to Mortgage News Daily. This has taken away the purchasing power of buyers who have already struggled with high prices.
New home sales, as measured by signed contracts rather than closings, rose a strong 21% in March versus February. Builders benefit from the shortage of existing houses for sale, but prices for new houses are also rising sharply.
Builders have not ramped up production enough to meet all demand as they are hampered by rising land and material costs and an increasingly difficult labor shortage. The hope now is that with more vaccinations and people feeling better about social interaction, more potential sellers will list their homes.
“An upturn in salespeople could mean some relief is ahead, if perhaps an above-average percentage of homeowners hits the market later this year,” said Danielle Hale, chief economist at realtor.com. “While it will not be enough to end the shortage of homes for sale, this wave of sellers will bulge and give homebuyers more choice.”