In the continuation of a not-unexpected-trend, home sales continued to slow down in the month of April, 2022. While both existing and new-home sales declined, a double digit drop to new-home sales will undoubtedly create some waves in the market, as builder sentiment has also declined for four months straight. Keep reading below for some additional data points and a review of the most recent reports.
Existing-Home Sales Continue Downward Trend
In a move consistent with the emergence of a transitional market, existing-home sales registered a 2.4% drop in sales from March to April, according to the most recent data release from the National Association of Realtors (NAR). This meant a seasonally adjusted rate of 5.61 million in April, and was also a decline of approximately 350k units, or 5.9% year-to-year from 2021 (April 2022 saw a rate of 5.69 million).
Lawrence Yun, Chief Economist at NAR points to rising interest rates and high prices as the primary motivators for this ongoing decline. In the report, he shares:
“Higher home prices and sharply higher mortgage rates have reduced buyer activity…It looks like more declines are imminent in the upcoming months, and we’ll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years.”
Prices continued to rise throughout April, although current appreciation seems to have cooled a bit compared to earlier in the year. The median existing-home price registered at $391,200, which is a 14.8% increase from the previous year, marking 122 months of continuous home price appreciation.
The major silver lining of these past few month’s market activity has been the slight increase provided to housing inventory. At the month’s end, inventory sat at 1.03 million units, or approximately 2.2 months worth. This is an increase of over 50k units compared to what was available at the end of March.
New-Home Sales Take a Tumble
While the drop to existing-home sales was mild in April, new-home sales declined by 16.6% according to the latest report from the Census Bureau and Dept. of Housing and Urban Development. This is nearly double the rate of decline experienced in March of 2022 and furthers the months-long trend of new-home sales decline. The month ended with a seasonally adjusted annual rate of 591,000 compared to last year’s rate of 809,000 (a 26.9% decline).
Regardless of the slowdown in sales, prices continue to climb, with the median sales price registering at $450,600 and the average sales price at $507,300.
Since mid-2020, the market has been red hot. Buyer demand was at all time highs as inventory reached historic lows. As the market begins to reconcile these trends and we revisit more pre-pandemic resembling activity, now is the time to connect with your clients to act. While at a slower pace, interest rates and prices are both projected to continue rising through 2023, so acting now could save them substantial costs in the long term.