US Housing Market Stagnates in April as Spring Buying Season Fails to Ignite
Existing Home Sales Barely Budge in April
The spring homebuying season, typically the busiest time of the year for the U.S. housing market, delivered another lackluster performance in April. Sales of previously owned homes edged up by a mere 0.2% from March, settling at a seasonally adjusted annual rate of 4.02 million units, according to the National Association of Realtors (NAR). This figure was unchanged from April of last year and fell short of the 4.12 million pace that economists had anticipated, based on data from FactSet.
Since early 2023, sales have been hovering near the 4-million mark, well below the historical norm of approximately 5.2 million. The persistent stagnation underscores the housing market’s struggle to regain momentum in the face of elevated mortgage rates and tight supply.
Home Prices Reach New April Record Despite Slower Growth
While sales remained lackluster, home prices continued their upward trajectory, albeit at a more modest pace. The national median sales price rose 0.9% in April compared to a year earlier, hitting $417,700—an all-time high for any April on records dating back to 1999. This marks the 34th consecutive month of year-over-year price increases. The combination of high prices and limited inventory has made it increasingly difficult for many buyers, despite incomes now rising faster than home prices.
Affordability Remains a Major Hurdle
Years of soaring home values, particularly during the pandemic-fueled buying frenzy of the early 2020s, have locked out many prospective homeowners. A chronic shortage of listings, stemming partly from years of below-average new construction, has helped sustain elevated prices even amid a multiyear sales slump. Although average wages have grown, affordability continues to be a significant barrier for first-time buyers and middle-income families alike.
Lawrence Yun, NAR’s chief economist, noted that “this spring homebuying season, so far all the way through April, we can say we are not predicting any increase compared to one year ago.” The market has been in a downturn since 2022, when mortgage rates started climbing from their pandemic-era lows. Last year, existing home sales hit a 30-year low, and the trend has persisted through the first quarter of 2024.
Mortgage Rates and Market Dynamics
Homes sold in April likely went under contract in February and March, when the average rate on a 30-year fixed mortgage ranged from 5.98% (the lowest in three and a half years) to 6.38%, according to Freddie Mac. Last week, the average rate stood at 6.37%. While rates have remained below year-ago levels, they have been volatile due to geopolitical tensions, such as the conflict with Iran, which has driven up energy prices and fueled inflation concerns.
For those who can afford to buy, more properties are becoming available, though inventory still falls short of historical norms. At the end of April, there were 1.47 million unsold homes on the market—an increase of 5.8% from March and 1.4% from April 2023. This is the highest April inventory since 2019, when the month-end total was 1.83 million. However, it remains below the roughly 2 million homes that were typically available before the COVID-19 pandemic.
Looking Ahead: Will the Summer Provide a Boost?
The housing market’s sluggish start to 2024 suggests that the traditional spring rebound has not materialized. With mortgage rates hovering around 6.3% to 6.4% and home prices still climbing, many potential buyers remain on the sidelines. The modest uptick in inventory could provide some relief, but until supply increases more substantially and affordability improves, the market is likely to remain in a holding pattern. Industry observers will be watching closely to see if the summer months bring any significant shifts.
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