Home prices are collapsing and taking their biggest plunge in 11 years – with a median cost of $388,000 – as high mortgage rates and limited supply make buying today unrealistic for many Americans
- Sales of existing homes fell 3.4% in April from the previous month to a seasonally adjusted annual rate of 4.28 million, the National Association of Realtors said.
- The median price of existing homes fell 1.7% in April from a year earlier to $388,800, the biggest year-over-year price drop since January 2012
- Sales of existing homes have fallen by about a third since the start of 2022 as soaring mortgage rates made buying unaffordable for many people
Home prices have crashed to their lowest level in more than 11 years as soaring mortgage rates take a toll on the American Dream.
The median price of existing homes fell 1.7% from a year earlier to $388,800 in April. Still, markets in the Northeast and Midwest regions saw price increases, the National Association of Realtors said Thursday.
Sales of existing homes – the majority of the market – plunged 3.4% in April from the previous month to a seasonally adjusted annual rate of 4.28 million.
Sales have fallen by around a third since the start of 2022 as soaring mortgage rates have made buying unaffordable for many. Meanwhile, sharp increases are ravaging the supply of real estate as existing owners are reluctant to abandon locked-in low rates.
The housing market has been hardest hit by the Federal Reserve’s fastest monetary policy tightening campaign since the 1980s after loose fiscal policy under Joe Biden flooded the economy with liquidity.
The median price of existing homes fell 1.7% from a year earlier to $388,800 in April. Still, markets in the Northeast and Midwest regions saw price increases
Sales of existing homes – the majority of the market – fell 3.4% in April from the previous month to a seasonally adjusted annual rate of 4.28 million
Sales of existing homes – the majority of the market – fell 3.4% in April from the previous month to a seasonally adjusted annual rate of 4.28 million, the National Association of Realtors said Thursday.
The average rate for a 30-year home loan has mainly fallen in recent weeks, hovering around 6.3% since the beginning of March. But it is still 1.5% more than a year ago.
When mortgage rates rise, they can add hundreds of dollars a month in costs for homebuyers on top of already high home prices.
High rates and stubbornly low inventory of homes on the market have kept many potential buyers on the sidelines over the past year, resulting in a lackluster start to the spring home buying season.
In the first four months of 2023, existing home sales are about 27% below the pace of the same period last year. Sales are down 33% from their last peak in January 2022.
The shortage of homes for sale has kept the market competitive, leading to bidding wars in many markets, especially for the more affordable homes.
In Las Vegas last Saturday, a home listed at $395,000 drew huge interest from potential buyers on a viewing, while another hoping to fetch $510,000 had no visitors.
Realtor Noah Herrera said CNBC: ‘Below $350,000 and $400,000, there are several offers. You will see eight or nine people trying to get into the house to buy the actual house. Above $500,000 it slows down a bit.
In total, there were 1.04 million homes on the market at the end of April, up 7.2% from the previous month and 1% from April last year, the NAR said.
At the pace of April sales, it would take 2.9 months to deplete the current inventory of existing homes, compared to 2.2 months a year ago. A four to seven month supply is considered a healthy balance between supply and demand.
Others strangling the market are sshortages of transformers and other building materials that have significantly slowed the rate of completion of new homes. Tighter credit conditions could also make it harder for builders to finance new projects.
Properties generally remained on the market for 22 days in April, compared to 29 days in March. Seventy-three percent of homes sold last month had been on the market for less than a month. First-time buyers accounted for 29% of sales, compared to 28% a year ago.
Cash sales accounted for 28% of transactions compared to 26% a year ago. Distressed sales, including foreclosures, were just 1% of transactions, unchanged from March and the year before.
