Why Did April Existing Home Sales Decrease?

Rising mortgage rates and a lack of homes to buy, especially affordable ones, are putting a damper on housing demand. With the sales of existing homes dropping in April, higher mortgage rates and continued low inventory are most likely to blame, says the New York Times. The median sales price of an existing home reached $341,600 in April, up 19.1% year over year, and housing inventory remained 20.5% down annually. Both the price and the price increases are at record highs, resulting in a tough market for first-time buyers.

As a result, competition for homes can be intense. The Realtors said that 88 percent of homes sold in April were on the market for less than a month. A quarter of buyers paid cash. At Redfin, the online brokerage, half of all homes sold in recent weeks have gone for more than their asking price, up from about a quarter a year ago.

“Even if demand comes down, supply is the issue, and until we see more homes come on the market, that’s going to limit sales,” said Glenn Kelman, Redfin's chief executive. “When you meet a new buyer you almost say, ‘Good luck.’”

The increase in remote work during the pandemic has led to an increase in demand for homes, particularly outside of city centers. That demand has remained as the economy has begun to reopen, even as millions of millennials are reaching the age when Americans have historically looked to buy homes. But the combination of high prices and limited inventories is making it especially hard for young people to get into the housing market.

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