US Existing Home Sales Continue to Decline

The US housing market continued its decline for the second month in a row as existing home sales fell by 3.4% to 4.28 million units in April, according to a report by the National Association of Realtors (NAR). The figure was below the forecast by economists polled by Reuters who predicted 4.30 million units. Year-on-year, existing home sales fell 23.2%. The current US median home price fell 1.7% in April, compared to the same period in 2022, to $388,800 per unit. Tight housing supply has made it difficult for potential buyers to return to the market, with only 1.04 million pre-owned homes for sale, up 1% from a year ago.

Despite the fall in the national median home price, markets in Northeast and Midwest regions saw house prices increase. About half of the US states are seeing house prices rise, according to the chief economist of NAR, Lawrence Yun.

The supply of housing is unlikely to improve with many homeowners reluctant to sell their properties as mortgage rates remain high. Mortgage rates on 30-year fixed loans averaged around 6.35% last week, much higher than 5.30% a year earlier, according to mortgage lender Freddie Mac. Shortages of transformers and other building materials also significantly slow the rate at which new homes are completed. Tighter credit conditions can also make it difficult for builders to finance new projects.

The US housing market was hit hard by the Covid-19 pandemic, and while it is recovering, the high cost of housing is still a barrier for many potential buyers. However, the tight housing supply is expected to push up the prices of homes in the coming months, creating a difficult situation for first-time buyers.