Existing home sales for April painted a familiar picture of a market still facing low supply, as sales fell for the third month in a row, 2.7% less than in March to 5.85 million, the National Association of Realtors reported on Friday.
Despite the drop, demand for housing remains strong compared to a year ago, as evidenced by existing home sales from January to April, which were up 20% compared to 2020. Continued demand is fueling appreciation of prices already red-hot, with the existing median The price of housing for all types of housing in April was $ 341,600, 19.1% more than in April 2020, since all regions registered an increase of prices.
Strong competition driven in part by low mortgage rates, demographics and an improving economy are driving home prices at the strongest pace in decades, with sales occurring at lightning speed and often above. of the list price, noted Zillow Economist Matthew Speakman. This high level of competition may be beginning to affect buyer confidence and could be holding back sales volumes.
“Last month, existing home sales posted their best April bottom line since 2006,” Speakman said. “The volume of new listings had a decent increase in March and April, and more people believe it is a good time to sell a home than at any time since the pandemic began.”
As borrowers struggle in the trenches of bidding, unsold inventory is at a 2.4-month supply at current sales pace, slightly above the 2.1-month supply in March and below the supply of 4 months registered in April 2020.
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According to NAR, these numbers continue to represent near-record lows.
Properties typically stayed on the market for 17 days in April, compared to 18 days in March and 27 days in April 2020. Approximately 88% of homes sold in April 2021 were on the market for less than one month.
Since the housing inventory is a key element at this time, Fannie maeThe economic and strategic group modified its predictions for 2021. The group said it expected that a combination of the waning COVID-19-induced movement toward single-family housing and continued tight inventories would lead to a slowdown in existing home sales as the year advances. The group noted that despite year-over-year increases, they cannot boost their existing home sales predictions higher under the current circumstances.
NAR also highlighted the role of inventory in existing home sales.
“We will see more inventory hit the market later this year as more COVID-19 vaccines are administered and potential home sellers become more comfortable listing and displaying their homes,” said Lawrence Yun, chief economist at NAR. “The decrease in the number of homeowners in mortgage forbearance will also generate more inventory.”
NAR expects the projected additional to cool the torrid pace of price appreciation later in the year.
However, like Joel Kan, the Mortgage Bankers Association The associate vice president for economic and industrial forecasting pointed out that inventory shortages will persist in the short term. US Census Bureau Data from earlier this week showed that residential home construction began to slow down due to challenges in the cost and availability of building materials.
First-time buyers, who accounted for a good chunk of the 2020 buying market, were responsible for 31% of existing home sales in April, up from 32% in March and 36% in April 2020.
“First-time buyers, in particular, have trouble securing that first home for a multitude of reasons, including a lack of enough affordable properties, competition with cash buyers, and properties leaving the market at such a rapid rate,” Yun said.
Broken down regionally:
- Existing home sales in the Northeast fell 3.9% from March, but the annual rate of 730,000 represents a 30.4% jump from the previous year. The median price in the Northeast was $ 381,100, up 22% from April 2020.
- Existing home sales in the Midwest grew 0.8% to an annual rate of 1,290,000 in April, a 13.2% increase from the prior year. The median price in the Midwest was $ 259,300, a 13.5% increase from April 2020.
- Sales of existing homes in the South decreased 3.7%, registering an annual rate of 2,600,000 in April, 39.0% more than in the same period of the previous year. The median price in the south was $ 289,600, an increase of 15.8% over the previous year.
- Sales of existing homes in the West decreased 3.1% from the previous month, registering an annual rate of 1,230,000 in April, an increase of 53.8% from the previous year. The median price in the West was $ 501,200, 19.9% more than in April 2020.