Home Sales Slip Unexpectedly in April Despite Big Gains in Supply

Unexpected Decline and Inventory Changes

Sales of previously owned homes slipped unexpectedly in April, with a 1.9% decrease compared to March, resulting in 4.14 million units sold on a seasonally adjusted annualized basis. This decline mirrored the year-over-year decrease compared to April 2023. These figures were closely tied to the rising mortgage rates observed since the beginning of February, which hovered around 7% for two months before increasing further in April.

Despite the dip in sales, the housing inventory experienced significant gains. Total inventory reached 1.21 million units at the end of April, marking a 9% month-to-month increase and a 16% rise year over year. However, this supply still falls short of the 6-month inventory considered balanced, representing only a 3.5-month supply at the existing sales pace.

Market Segmentation and Regional Performance

The housing market displayed notable variances across different price segments and regions. Homes priced below $100,000 saw a significant drop in sales, declining by 7.1% year over year. Conversely, the market for homes priced over $1 million thrived, with sales soaring by 40%. The segmented market shows a clear disparity driven by economic conditions and buyer power.

Regionally, the performance of home sales varied, with declines recorded in the Northeast, Midwest, and South. The West, however, noted a year-over-year increase in sales, showcasing a region-based resilience amid broader market trends. First-time buyers also showed signs of a slight recovery, making up 33% of April sales, up from 29% in the previous year.

Record Prices and Market Dynamics

The median price of existing homes sold in April climbed to a new record high of $407,600. This represents a 5.7% year-over-year increase. Strong demand maintained its grip on the market, with approximately 27% of homes selling above their list prices. These pricing dynamics underscore the competitive nature of the current market.

The figures reveal a complex housing market, grappling with inventory growth but still facing supply shortages. While certain segments and regional markets outperform, the overall decline in sales suggests broader challenges influenced by how potential homebuyers respond to fluctuating mortgage rates and economic uncertainties. As the market continues to adjust and buyers adapt, careful monitoring of these trends will be crucial for stakeholders and policymakers.