Spring Home Sales Stagnate: A Q&A on the U.S. Housing Market in April

The U.S. housing market continued to struggle in April, with sales of existing homes remaining virtually flat, marking another subdued spring season. Despite a slight uptick in inventory, high prices and lingering affordability issues kept many buyers on the sidelines. This Q&A unpacks the key data, trends, and implications.

1. What did the April home sales data reveal?

Sales of previously owned homes inched up by just 0.2% from March to a seasonally adjusted annual rate of 4.02 million units, according to the National Association of Realtors (NAR). That figure fell short of economists' expectations of about 4.12 million, as reported by FactSet. On a year-over-year basis, sales were unchanged from April 2023. More strikingly, the pace has hovered near 4 million since last year, well below the historic norm of roughly 5.2 million. Lawrence Yun, NAR's chief economist, emphasized that this spring buying season has not delivered any increase compared to a year ago.

2. How did home prices change in April?

The national median home price rose 0.9% from a year earlier to $417,700, setting a new record for the month of April since NAR's data series began in 1999. This marks the 34th consecutive month of year-over-year price gains. While the pace of appreciation has slowed, prices remain elevated, contributing to ongoing affordability challenges for buyers. The persistent price growth is supported by a chronic shortage of homes for sale, despite a multiyear slump in sales volume.

3. What factors are driving the housing market slump?

The downturn began in 2022 when mortgage rates started climbing from pandemic-era lows. Sales of existing homes essentially flatlined last year at a 30-year low and have remained sluggish into 2024. Affordability is a major hurdle: years of soaring prices, amplified by the buying frenzy during ultra-low rate times, have locked out many prospective buyers. Additionally, a long-standing shortage of homes for sale—partly due to below-average new construction—keeps prices high even as demand softens. While incomes are now growing faster than home prices, the cumulative impact of earlier price spikes still strains household budgets.

4. How are mortgage rates affecting buyers?

Most April purchases were likely contracted in February and March, when the average 30-year fixed mortgage rate ranged from 5.98% to 6.38%, according to Freddie Mac. That was below year-ago levels but still elevated. Since then, rates have fluctuated, recently standing at 6.37%. The market has also been influenced by geopolitical events, such as the war with Iran, which pushed energy prices higher and stoked inflation worries. Despite lower rates than a year ago, the overall cost of borrowing remains a barrier for many, especially first-time buyers.

5. How does home inventory compare to historical norms?

At the end of April, there were 1.47 million unsold homes on the market, up 5.8% from March and 1.4% from a year earlier. That is the highest April inventory since 2019, when 1.83 million homes were listed. However, supply is still far below the roughly 2 million homes that were typical before the COVID-19 pandemic. The continued price increases indicate that demand still outpaces supply, though the small inventory gain provides some relief for buyers able to afford current prices.

6. What can we expect for the rest of the spring and summer?

NAR’s Lawrence Yun predicts no meaningful increase in sales compared to last year for the spring season through April, and the trend may persist. Affordability remains the central challenge: even with somewhat lower mortgage rates, the cumulative effect of years of price growth continues to squeeze budgets. The modest rise in inventory could help moderate price gains, but the market is still far from balanced. Until supply increases more substantially or incomes catch up faster, the housing market is likely to remain in a subdued state.