Continuing inventory woes have hampered existing-home sales for the third consecutive month, according to the National Association of Realtors’ latest market report released on Friday. Existing-home sales declined across the country, except in the Midwest region, where sales increased 0.8 percent from March.
Total existing-home sales declined 2.7 percent month over month to a seasonally adjusted annual rate of 5.85 million. However, existing-home sales were up 33.9 percent from last April, when most of the country was in lockdown.
“Home sales were down again in April from the prior month, as housing supply continues to fall short of demand,” NAR Chief Economist Lawrence Yun said in a written statement. “Despite the decline, housing demand is still strong compared to one year ago, evidenced by home sales from this January to April, which are up 20 percent compared to 2020.”
Due to the worsening imbalance between supply and demand, the median existing-home price increased 19.1 percent year over year to a record high of $341,600. Existing-home prices increased in every region and represented 110 consecutive months of year-over-year gains.
Although total housing inventory declined 20.5 percent annually, the market did experience a small month-over-month boost in inventory (+10.5 percent) and unsold inventory (2.1 months to 2.4 months). Average days on market declined to 17 days in April, with 88 percent of homes selling within a month.
Yun said the boost in month-over-month inventory levels reflects would-be homeseller increasing willingness to enter the market as states reopen and legislators relax social distancing orders.
“We’ll see more inventory come to the market later this year as further COVID-19 vaccinations are administered and potential home sellers become more comfortable listing and showing their homes,” he said. “The falling number of homeowners in mortgage forbearance will also bring about more inventory.”
“The additional supply projected for the market should cool down the torrid pace of price appreciation later in the year,” he added.
Realtor.com Chief Economist Danielle Hale said the impending inventory boost will lighten the load for buyers and give them more housing options, although the days of bidding wars are far from over.
“Even if a bit wary of the conditions they face in today’s market, buyers remain eager, which has resulted in quick home sales and at record prices,” she explained. “Meanwhile, rising seller sentiment could mean some relief is ahead with perhaps even a greater than normal share of homeowners stepping in the market later this year.”
“While it’s not enough to end the shortage of homes for sale, this wave of sellers will make a dent, giving home buyers more options to choose from,” she added.
Even if more homesellers enter the market, Mortgage Bankers Association AVP of Economic and Industry Forecasting Joel Kan said rising construction costs will present a formidable challenge for homebuyers looking to purchase a new home or remodel a fixer-upper.
“The upward drift in the cash-purchases share to 25 percent compared to 15 percent last year, and another increase in the median sales price to a record-high of $341,600, is no surprise given the imbalance of supply and demand,” Kan told Inman in an emailed statement. “In the short-term, inventory shortages will persist. U.S. Census Bureau data from earlier this week showed residential housing starts have started to slow due to challenges in the cost and availability of building materials.”