- Home sales slumped in April simply because buyers couldn’t find enough homes to buy.
- Strong demand drove prices up to record levels and time on market down to new lows.
For the second month in a row, the three-year inventory drought punished sales in April, driving them down on every national market report. This happened despite a demand so strong that prices soared and time on market decreased as homes sold at record pace.
Sales fell from 2.3 percent to 4.6 percent on a monthly basis and now trail last year’s sales in two of the three national reports that include sales data. Insatiable demand pushed prices from 5.2 to 9 percent higher than they were last April, squeezing affordability even more.
“We may be seeing some frustration from buyers,” said Re/Max CEO, chairman of the board and co-founder Dave Liniger. “Inventory is tighter than ever, while strong demand keeps driving up home prices.
“At the same time, many potential sellers may also be reluctant to list their homes because the tight inventory might impact them as buyers. Homebuyers and sellers will need to work with experienced real estate agents to navigate this tough market.”
The National Association of Realtors’ (NAR) Lawrence Yun concurred: “Demand is easily outstripping supply in most of the country, and it’s stymieing many prospective buyers from finding a home to purchase.”
Time on market fell below record speeds set in March. NAR reported that listings are now spending less than a month on market before they have a contract.
The median time on realtor.com clocked by all of its 1.4 million listings in April fell to only 62 days, six days fewer than April 2016 and the lowest number of days on market since the recession, according to realtor.com.
Redfin, NAR and Re\Max all reported that months’ supplies in April were dangerously below the six months considered balanced.
April Market Reports at a Glance
|Source||Monthly Sales Trend||Annual Sales Trend||Monthly Price Trend||Annual Price Trend||Median Sale Price||Median Days on Market||Comments|
|NAR||-2.3%||+1.6%||+3.5%||+6%||$244,800||29||Inventory is not keeping up with the fast pace homes are coming off the market|
|Realtor.com||NA||NA||+3%||+9%||$269,000||62||Upswing a month earlier than normal|
|Redfin||-1.6%||-1.2%||+2.8%||+6.2%||$280,000||40||Market is likely to accelerate further|
|RE/MAX||-4.6%||-4.5%||+.44%||+5.2%||$226,000||57||New low in days on market|
|Zillow*||NA||NA||+.45%||+7.3%||$198,000||NA||Home values return to Bubble-era peak|
*These data are not sale prices but valuations based on Zillow’s AVM.
Inventories grew on realtor.com as the site added 525,000 new listings during the month. However, buyers gobbled them up almost as quickly as they came on market, and the year-over-year inventory deficit reached double-digit levels on realtor.com as well as in Re\Max’s and Redfin’s April reports.
April Inventory Watch
|Source||Monthly Active Listings||Annual Active Listings||Months of Supply||Comments|
|NAR||+7.2%||-9%||4.2||Homes in the lower- and mid-market price range are hard to find|
|Realtor.com||+3%||-12%||NA||Lack of affordable inventory remains a critical issue|
|RE/MAX||-1.3%||-17.6%||2.8||102nd month of inventory declines|
|Redfin||-6.0%||-13.3%||3.1||The only record this market can’t break is sales. You need more inventory for that.|
|Zillow||NA||-7.7%||NA||Inventory, which drives home values and, indirectly, rents, continued to worsen in April.|
Median prices rose for the 62nd straight month of year-over-year gains in NAR’s existing home sales series and reached an all-time peak on Zillow, surpassing the highest price it reported in the boom era.
Prices on Zillow rose most in Seattle, Dallas, Tampa, Detroit and Orlando. “The only market record this market can’t break is sales. You need more inventory for that!” commented Zillow’s chief economist Svenja Gudell
Though the run-up in home prices is making it harder to buy a home, Gudell reported that rents are squeezing consumers even more than prices. “In the fourth quarter, homeowners spent 15.8 percent of their incomes on a mortgage, which is below the 21 percent that homeowners spent, on average, from 1985 to 2000. In fact, rent affordability is worse, taking 29.2 percent of renters’ incomes, up from an average of 25.8 percent between 1985 and 2000,” she wrote.
Steve Cook is editor and co-publisher of Real Estate Economy Watch. Visit him on LinkedIn and Facebook.