WASHINGTON (Reuters) – U.S. existing home sales fell for the second straight month in April, driving up prices in nearly half the country, which combined with potentially higher mortgage rates could slow the housing market recovery.
The National Association of Realtors reported Thursday that existing home sales fell 3.4% last month to a seasonally adjusted annual rate of 4.28 million units. Sales fell in all four regions. Economists polled by Reuters forecast a decline of 4.30 million units.
Home resales, which account for a large portion of US home sales, fell 23.2% year-over-year in April.
The housing market has been hit the hardest by the Federal Reserve’s sharpest tightening campaign since the 1980s. The average rate on the popular 30-year fixed mortgage has fallen from a high of 7.08% in November, the highest since 2002.
It averaged 6.35% last week, up from 5.30% a year ago, according to data from Freddie Mac Mortgage Financing Agency.
The persistent shortage of housing supply is making it difficult for potential buyers to come back into the market to take advantage of falling mortgage rates. Supply is unlikely to improve as many homeowners are staying in their homes for longer, which are still affected by high mortgage rates.
Shortages of transformers and other construction materials have significantly slowed the rate at which new homes are completed. The tightening of credit terms may make it more difficult for builders to finance new projects.
In April, the median price of a used home fell 1.7% from a year earlier to $388,800. Nevertheless, the Northeast and Midwest markets saw price increases.
There were 1.04 million older homes on the market last month, up 1.0% from a year ago.
At April’s sales pace, it will take 2.9 months to liquidate current existing home inventory, up from 2.2 months a year ago. Four to seven months’ supply is considered a healthy balance between supply and demand.
Homes typically stayed on the market for 22 days in April, compared to 29 days in March. 73% of homes sold last month were on the market for less than a month. First-time home buyers account for 29% of sales, up from 28% a year ago.
