May 21, 2021 Reading Time: 3 minutes

Sales of existing homes fell 2.7 percent in April, dropping below 6 million for the first time since August 2020, hitting a 5.85 million seasonally adjusted annual rate, the third consecutive monthly decline (see top of first chart). Sales are still up 33.9 percent from a year ago.

Sales in the market for existing single-family homes, which account for just under 90 percent of total existing-home sales, fell 3.2 percent in April, coming in at a 5.13 million seasonally adjusted annual rate. April was the fourth consecutive decline. From a year ago, sales are up 28.9 percent (see top of first chart).

Condo and co-op sales posted a 1.4 percent rise for the month, leaving sales 84.6 percent above the April 2020 pace. Sales came in at a 720,000 pace for the month versus 710,000 in March.

Total inventory of existing homes for sale rose 10.5 percent to 1.16 million in April, pushing the months’ supply (inventory times 12 divided by the annual selling rate) to 2.4, the highest since October 2020 though still a very low supply by historical measure.

For the single-family segment, inventory increased 11.2 percent to 990,000. The months’ supply rose to 2.3 (see bottom of first chart), from 2.0 in March, while the condo and co-op inventory rose 4.3 percent to 171,000, putting months’ supply at 2.9 versus 2.8 in the prior month. 

The median sale price in April of an existing home was $341,600, 19.1 percent above the year ago price. For single-family existing home sales in April, the price was $347,400, a 20.3 percent rise over the past year, while the median price for a condo/co-op was $300,400, 12.6 percent above April 2020.

By region, total sales were down in three of the four regions in April: sales fell 3.7 percent in the South, the largest region by volume, leaving that region’s sales rate 39.0 percent above the year-ago pace, while sales were down 3.9 in the Northeast, putting them 30.4 percent above year-ago levels, and sales were off 3.1 percent in the West but are up 53.8 percent from the year-ago level. Sales were up 0.8 percent for the month in the Midwest and are 39.0 percent above the April 2020 rate.

Sales for existing single-family homes followed a similar pattern. Sales fell 5.5 percent in the South, leaving that region’s sales rate 32.5 percent above the year-ago pace while sales were off 1.6 percent in the Northeast, leaving sales 24.5 percent above year-ago levels and sales were down 3.6 percent in the West but are up 50.0 percent from the year-ago level. Single-family sales were up 0.8 percent for the month in the Midwest and are 11.1 percent above the April 2020 rate.

Limited supply and rising prices are strong headwinds for the housing market. Additionally, rising mortgage rates and some easing of the rush out of dense urban areas for suburban housing or rural country homes may also be undermining housing demand. Housing is likely to perform reasonably well but the support for surging demand and skyrocketing prices has likely peaked.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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