E Economics

Existing Home Sales Fell To The Lowest Since June 2020

21 May, 2021
home sales

Existing home sales surprised downward in April, hitting a 10-month low. According to the National Association of Realtors (NAR), they decreased by 2.7% MoM, reaching 5.85M (down from 6.01M prior). Once again, the decline can be explained by several factors such as lower affordability and the lack of supply.

Home Sales

1. Demand has been hit by further deterioration of housing affordability

Housing affordability has been under pressure since January. Prices kept climbing at a fast rate. The NAR highlighted that “The median existing-home price2 for all housing types in April was $341,600, up 19.1% from April 2020 ($286,800), as every region recorded price increases. This is a record high and marks 110 straight months of year-over-year gains.” Other reports confirmed that housing prices growth accelerated in April. Redfin reported “A record high 21% year-over-year growth rate in the median home-sale price, which hit $348,500. One contributing factor to the large rate of growth is that more high-end homes are being sold now than a year ago. Asking prices reached an all-time high of $360,975.

2. Lack of inventory kept weighting on home sales

One of the recent development related to the the housing market has been the collapse in inventory, which pushed prices upward. The NAR underlined “Total housing inventory at the end of April amounted to 1.16 million units, up 10.5% from March’s inventory and down 20.5% from one year ago (1.46 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, slightly up from March’s 2.1-month supply and down from the 4.0-month supply recorded in April 2020. These numbers continue to represent near-record lows.” This pattern was sometimes cited as a dampening factor on sales.