Sales falling again in the US with lack of inventory to blame

After rising for two months in a row, home sales in the United States fell back in April on a monthly and annual basis, down 2.5% and 1.4% respectively, the latest index shows.

Sales fell across all the four main regions covered by the National Association of Realtors (NAR) index with a lack of homes for sale causing the slump, while prices are rising.

‘The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home,’ said Lawrence Yun, NAR chief economist.

He explained that feedback for real estate agents suggests that the healthy economy and job market are keeping buyers in the market for now even as they face rising mortgage rates. ‘However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford,’ he pointed out.

Prices increased year on year by 5.3% to a median of $257,900. It is the 74th month in a row of annual price growth. And while inventory increased by 9.8% it is still 6.3% lower than a year ago and has fallen year on year for 35 consecutive months.

The data also shows that properties typically stayed on the market for 26 days in April, which is down from 30 days in February and 29 days a year ago and 57% of homes sold in April were on the market for less than a month.

‘What is available for sale is going under contract at a rapid pace. Since NAR began tracking this data in May 2011, the median days a listing was on the market was at an all-time low in April, and the share of homes sold in less than a month was at an all-time high,’ Yun said.

He warned that with mortgage rates and home prices continuing to climb, an increase in housing supply is absolutely crucial to keeping affordability conditions from further deterioration as the current pace of price appreciation far above incomes is not sustainable in the long run.

First time buyers accounted for 33% of sales in April, the highest since last July and up from the 30% recorded in March but down from the 34% from March 2017. Foreclosures and short sales amounted to 3.5%, their lowest level since tracking began in October 2008, and down from 4% in March and 5% a year ago.

A breakdown of the figures shows that sales in the Northeast fell 4.4% and are 11% below a year ago with a median price of $275,200, which is 2.8% above April 2017. In the Midwest sales were unchanged month on month but are 3% down year on year with a median price of $202,100, up 4.6% from a year ago.

Sales in the South decreased 2.9% in April, but are still 2.2% above a year ago with a median price of $227,600, up 3.9% from a year ago. While in the West sales fell by 3.3% and are 0.8% down year on year with a median price of $382,100, up 6.2% from April 2017.