Housing activity shows more signs of deterioration

Existing home sales fell 2.4 percent in April, to a seasonally consistent annual rate of 5.61 million. Sales are down 5.9 percent from a year ago.

Market sales for existing single-family homes, which accounted for about 89 percent of total existing home sales, fell 2.5 percent in April, reaching a seasonally consistent annual rate of 4.99 million, down from 5 million in the first month of June 2020 (see first chart). Compared to a year ago, the sales rate has decreased by 4.6 percent.

Sales have slowed in two of the four regions in the single-family segment. Sales were 6.5 percent in the west and 5.6 percent in the south, the largest in terms of volume, while sales accelerated 3.7 percent in the northeast, the smallest in terms of volume, and 4.2 percent in the midwest. As measured a year ago, sales were slow in four regions (-11.1 percent in the northeast, -8.3 percent in the west, -3.5 percent in the south, and -0.8 percent in the midwest).

Condo and co-op sales fell 1.6 percent for the month, dropping sales at an annual rate of 620,000 per month, their slowest pace since July 2020, vs. 630,000 in March (see first chart). A year ago, condo and co-op sales were 13.9 percent slower. Condo and co-op sales were slow in April in the two regions, -11.1 percent in the Midwest and -8.3 percent in the Northeast, but unchanged in the West and 3.6 percent faster in the South. A year ago, sales were slow in four regions (-19.4 percent in the south, -11.1 percent in the Midwest, -8.3 percent in the north-east, and -6.7 percent in the west).

The total inventory of existing homes for sale rose 10.8 percent to 1.03 million in April (the first result above one million since November). But still very little in terms of historical comparison.

For the single-family segment, inventory rose 12.3 percent to 910,000 for the month (see second chart) but 7.1 percent below the April 2021 level. Monthly supply was 2.2, up from 1.9 in the previous month (see Chart 3).

Condo and co-op inventory remained unchanged at 118,000 (see second chart), leaving monthly supply at 2.3, up from 2.2 in March. Monthly supply is 17.9 percent below April 2021 (see third chart).

The average sale price of an existing home in April was $ 391,200, up 14.8 percent from a year earlier. For the sale of existing single-family homes in April, the price was $ 397,600, also an increase of 14.8 percent over last year and a record high (see Chart 4). The median price of a condo / co-op was $ 340,000, 13.1 percent above April 2021 and a record high (see Chart 4).

Housing may be volatile in the coming months as fundamentals adjust to changes in market conditions. Increased opportunities for employees to work remotely can have an impact on demand while supply chain problems and labor difficulties affect supply. Moreover, record-high prices and the recent rise in mortgage rates are likely to push some buyers out of the market.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 for over 25 years researching economic and financial markets on Wall Street. Bob previously headed Brown Brothers Harriman’s Global Equity Strategy, where he developed an equity investment strategy that combines top-down macro analysis with bottom-up fundamentals.

Prior to BBH, Bob was a senior equity strategist at State Street Global Markets, a senior economic strategist at Prudential Equity Group, and a senior economist at Citicorp Investment Services and a financial markets analyst. Bob holds an MA in Economics from Fordham University and a BS in Business from Lehigh University.

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