Home sales fell for the third straight month this year as home prices continue to rise at a record pace.
Existing home sales fell 2.7% to a seasonally adjusted 5.58 million in April, from a month earlier, according to the National Association of Realtors (NAR). The results missed analyst expectations of a 1% gain, according to Bloomberg consensus. April sales activity was up 33.9% from the same month a year earlier when the nation was under a lockdown due to the coronavirus pandemic. Compared to April 2019, existing home sales was up 11%. Sales activity in all but one of the four regions in the U.S. — the Midwest — fell. Only the Midwest, where homes are more affordable, recorded a gain of 0.8% from a month earlier, according to the NAR.
"Low inventory continues to hinder sales activity," said Lawrence Yun, NAR chief economist, during a press call prior to the release of the results, adding that despite the slowdown in activity the housing market is still "hot."
The median existing-home price for all housing types in April was $341,600, up 19.1% from April 2020, as every region recorded price increases. This is a record high (the NAR started tracking prices in 1999) and marks 110 straight months of year-over-year gains.
"Despite the decline [in sales], housing demand is still strong compared to one year ago, evidenced by home sales from this January to April, which are up 20% compared to 2020,” Yun said. “The additional supply projected for the market should cool down the torrid pace of price appreciation later in the year.”
Total housing inventory at the end of April was 1.16 million units, down 20.5% from one year ago — the lowest level since NAR started tracking homes for sale in 2011. The good news is inventory is up 10.5% from March, an indication that homebuilding is picking up.
Unsold inventory sits at a 2.4-month supply at the current sales pace, slightly up from March’s 2.1-month supply and down from the 4-month supply recorded in April 2020. These numbers continue to represent near-record lows. NAR first began tracking the single-family home supply in 1982.
Properties typically remained on the market for 17 days in April, down from 18 days in March and from 27 days in April 2020. Eighty-eight percent of the homes sold in April 2021 were on the market for less than a month. It's the swiftest pace of sales on record, according to NAR.
Yun noted that every home listed for sale last month got 5.1 offers and half of the homes purchased were sold for above listing price.
"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," said Realtor.com Chief Economist Danielle Hale, in a statement prior to the NAR results. "Meanwhile, rising seller sentiment could mean some relief is ahead with perhaps even a greater than normal share of homeowners stepping into the market. 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.”
The results were expected as pending homes sales, an early indicator of the health of the housing market, has slowed since the beginning of this year.
"Pending home sales, which lag existing sales, declined sharply by 11.5% in February and rebounded only slightly by 1.9% in March, suggesting another decline in existing home sales during April," said Nomura in a research note. "While we think demand remains strong and the transitory impact from weather has mostly waned, the shortage of homes on the market for sale will continue to constrain growth and exert upward pressure on home prices over coming months."
Amanda Fung is an editor at Yahoo Finance.