A larger-than-projected decline in April sales of previously owned homes from a 10-year high indicates the residential real estate market remains constrained by a lack of inventory, National Association of Realtors data showed Wednesday.
Contract closings declined 2.3% month over month to a 5.57 million annual rate (the forecast was 5.65 million), after a revised 5.7 million the prior month. The median sales price rose 6% year over year to $244,800. The inventory of available properties fell 9% year over year to 1.93 million, marking the 23rd consecutive year-over-year decline.
While inventory shortages are keeping home prices elevated and crimping affordability, plenty is working in favor of Americans looking to make the big purchase. Steady job growth and brighter wage prospects are cushioning household budgets, and mortgage rates remain historically low, having eased from a post-election surge.
In fact, properties in April were on the market for 29 days, the shortest timeframe since the NAR began tracking the figures in May 2011. The data are in line with the pace of new-home sales, which account for about 10% of the residential market and which eased last month from the strongest rate in almost a decade.
“A lack of inventory makes it very challenging for first-time buyers to get into the market,” Danielle Hale, NAR’s managing director of housing research, said at a press briefing accompanying the report. “Price growth is still outpacing income growth, and rents remain quite high. Low supply is hinting at another home-price gain in 2017.”
April purchases fell in three of four regions, led by a 5% decrease in the South; sales also dropped in the West and Northeast. At the current pace, it would take 4.2 months to sell the homes on the market, compared with 3.8 months in March and 4.6 months a year ago; the Realtors group considers less than a five-month supply as consistent with a tight market.
Single-family home sales decreased 2.4% last month to an annual rate of 4.95 million. Purchases of condominium and co-op units fell 1.6% to a 620,000 pace. First-time buyers made up 34% of all sales in April, compared with 32% the prior month. Homes sold in 29 days, compared with 34 days in March and 39 days in April 2016.