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First Cut: April existing home sales fall as expected; prices and supply were up

Sales of existing homes fell 17.8% in April to 4.33 million units (SAAR), a two-month “skid” due to the COVID-19 pandemic as described d by the NAR. The decrease was less for single-family units which were down 16.9% month-over-month to 3.94 million units than in multi-units which fell 26.4% to 390,000. Compared to April 2019, total sales were down 17.2%. Sales levels are back to post-Great Recession levels as the housing market struggled to emerge from the bust that accompanied the credit crunch and start of the recession in December 2007.

The median price for an existing home was up 2.2% in April from March to $286,000, and was up 7.4% compared to a year-ago. It is fairly typical for higher prices at the start of a new quarter and then the momentum to ebb for the next two months.

The slowdown in the existing home market has meant that supplies have increased to 4.1 months’ worth in April compared to 3.4 months in March, and were similar to the 4.2 months’ supply a year ago. Declines in mortgage interest rates sparked buying in the second half of 2019 and into early 2020 before the pandemic response started to affect economic activity significantly. Although near record low rates in March and April will keep well-qualified buyers in the market as they hunt for bargains, overall sales are not likely to recover until the labor market is more secure.

Sales were down across regions and all had double-digit declines. The largest drop in existing sales was in the West (-25.0% to 810,000), followed by the South (-17.9% to 1.88 million), the Northeast (-16.9% to 540,000), and the Midwest (-12.0% to 1.10 million).

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