Sales of existing homes in the US fell 1.9% in April, driven by high interest rates and high prices

WASHINGTON — WASHINGTON (AP) — High mortgage rates and rising prices continued to put a damper on the spring homebuying season last month.

Existing home sales fell 1.9% to a seasonally adjusted annual rate of 4.14 million in April, compared with a revised 4.22 million in March, the National Association of Realtors reported Wednesday. Sales fell nationwide: 4% in the Northeast, 2.6% in the West, 1.6% in the South and 1% in the Midwest.

The average price of previously occupied homes rose 5.7% to $407,600 – the tenth increase in a row and a record for April.

Lawrence Yun, the association's chief economist, called the sales decline “a bit frustrating.” Economists had expected turnover to reach 4.2 million.

The interest rate on the benchmark 30-year fixed-rate loan has risen five of the past six weeks and stands at 7.02%, up from 6.39% a year ago. Potential home buyers are also deterred by the high prices, partly caused by a tight supply of available homes.

The supply of housing increased by 9% compared to March to 1.2 million – the fourth increase in a row – but remains low: before the pandemic it was 1.7 million. Homeowners have been hesitant to put their homes on the market, in part because they don't want to give up their existing low-interest mortgages and buy new homes at higher rates.

The housing market could see some relief if the Federal Reserve cuts rates later this year.

“Normally we would see a surge in home sales this time of year, but mortgage rates continue to put pressure on listings and purchases,” said Robert Frick, an economist at Navy Federal Credit Union. “And unfortunately, prices continue to rise, further pushing opportunity away for lower-income and even middle-income Americans. The only real relief to the situation will come from a Fed rate cut later this year, which will eventually trickle down to mortgage rates.”

Sales were better at the top of the market. Homes priced at $1 million or more are up 40% from a year ago, in part because inventories of those homes have risen 34%.

A third of sales went to first-time buyers, the highest share since January 2021, but still below the 40% they historically accounted for.

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