Monday, June 17, 2024

U.S. Home Sales Decline by 1.9% in April Due to High Rates and Prices: WGN Radio 720

Home Sales Decline in April due to High Mortgage Rates and Rising Prices, NAR Reports

The spring homebuying season hit a bit of a snag last month, as existing home sales dropped by 1.9% to a seasonally adjusted annual rate of 4.14 million in April, according to a report by the National Association of Realtors. The decline in sales was felt across the country, with drops of 4% in the Northeast, 2.6% in the West, 1.6% in the South, and 1% in the Midwest.

One of the major factors contributing to the slowdown in home sales is the combination of high mortgage rates and rising home prices. The median price of previously occupied homes reached a record high of $407,600 in April, marking the tenth consecutive increase. The benchmark 30-year fixed-rate loan currently stands at 7.02%, up from 6.39% a year ago, making it less affordable for potential buyers to enter the market.

The tight inventory of available homes is also a contributing factor to the slow pace of home sales. While the supply of homes increased by 9% from March to 1.2 million, it remains significantly lower than pre-pandemic levels. Homeowners are hesitant to sell their properties due to the prospect of giving up existing mortgages at lower interest rates and buying new homes at higher rates.

Economists are hopeful that the housing market could see some relief if the Federal Reserve decides to cut interest rates later this year. Robert Frick, economist at the Navy Federal Credit Union, believes that a rate cut could potentially stimulate the market and make homeownership more accessible to a broader range of Americans.

Despite the overall decline in home sales, there was a surge in sales at the high end of the market, with homes priced at $1 million or more experiencing a 40% increase from a year ago. Additionally, first-time buyers accounted for a third of sales, the highest share since January 2021, but still below historical averages.

Overall, the housing market continues to face challenges due to high mortgage rates, rising home prices, and limited inventory. It remains to be seen how potential interventions, such as a rate cut by the Federal Reserve, could impact the market in the coming months.

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