U.S. second-hand home market starts peak season sluggishly; sales rise slightly but fall short of expectations, home prices hit record high for April.

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The US existing home sales market is showing signs of weakness as the traditional spring season begins. April sales data only saw a slight improvement from the previous month, failing to break the market’s stagnation and highlighting the current housing market’s struggle under the dual pressures of interest rates and prices.

According to data released by the National Association of Realtors (NAR) on Monday, the annualized rate of existing home sales in April was 4.02 million units, up just 0.2% from March, slightly lower than the median forecast by economists surveyed by Bloomberg. The March figure was the lowest in nearly nine months, and the recent rebound is almost negligible.

Meanwhile, the median selling price for existing homes in April rose 0.9% year-over-year to $417,700, marking the highest level for April on record. The crowding-out effect of high home prices on potential buyers continues. Although NAR’s home affordability index has improved from last year’s low, it has declined for two consecutive months.

Against the backdrop of high mortgage rates and historically high home prices, energy cost increases related to the Iran war are beginning to erode household budgets, further weakening demand for home purchases. The combination of these factors has significantly dampened what should be the peak sales season of the year.

Inventory improves but remains tight, sales diverge by region

In April, the inventory of existing homes rose to 1.47 million units year-over-year, the highest level for April since 2019. Normally, rising inventory is seen as a sign of supply and demand moving towards balance, but NAR Chief Economist Lawrence Yun poured cold water on this in a conference call with reporters.

"Although this is the highest inventory level since the pandemic, it’s still far from the 1.83 million units in April before COVID," Lawrence Yun said. This gap means that the supply side recovery process remains lengthy, making it difficult to exert substantial downward pressure on housing prices in the short term.

Regionally, both the Midwest and South recorded increases in sales in April, while the West fell to a three-month low, showing pronounced regional divergence in the market.

First-time buyers accounted for 33% of buyers in April, a slight decrease from a year ago. This group is typically the most sensitive to changes in interest rates and prices; their persistently low proportion reflects the continued impact of affordability pressures on buyers entering the market with lower thresholds.

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