WASHINGTON (AP) – High mortgage rates and rising prices continued to dampen the spring home buying season last month.
Existing home sales in April fell 1.9% to a seasonally adjusted annual rate of 4.14 million from a revised 4.22 million in March, the National Association of Realtors said Wednesday. Sales fell across the U.S., down 4% in the Northeast, 2.6% in the West, 1.6% in the South and 1% in the Midwest.
The median price of existing homes rose 5.7% to $407,600, the 10th consecutive year of increases and the highest April price on record.
Lawrence Yun, the association’s chief economist, called the drop in sales “a little frustrating.” Economists had expected sales to reach 4.2 million units.
The interest rate on the benchmark 30-year fixed-rate loan has risen in five of the past six weeks to 7.02% from 6.39% a year ago. Potential home buyers are also hesitant about rising prices, due in part to a tight inventory of available homes.
Housing supply increased 9% from March to 1.2 million units, the fourth consecutive increase, but remains at a low level. Before the pandemic, there were 1.7 million homes. Homeowners are hesitant to put their homes on the market, in part because they don’t want to forfeit their existing mortgages at low interest rates and buy new homes at higher rates.
If the Fed lowers interest rates this year, the housing market could get some relief.
“Home sales would typically surge at this time of year, but mortgage rates continue to hold back both listings and purchases,” said Robert Frick, an economist at Navy Federal Credit Union. “And unfortunately, prices continue to rise, putting homebuying further out of reach for low- and even middle-income Americans. The only real remedy to this situation is for the Federal Reserve to cut interest rates later this year, which would ultimately have a ripple effect on mortgage rates.”
Sales were stronger in the luxury market. Homes priced at $1 million or more jumped 40% compared to a year ago, in part because the inventory for those homes jumped 34%.
A third of sales were made by first-time buyers, the highest share since January 2021, but still below the 40% made up by past buyers.
