U.S. Homes Aren't Selling, but Prices Hit a Record High... Supply Shortage Persists

[Financial News, New York = Lee Byung-chul]  The existing-home market in the United States of America (USA) is still struggling to recover. With mortgage rates remaining high and the effects of the war between the United States, Israel, and Iran adding to the pressure, April existing-home sales fell well short of market expectations. The supply shortage also continued, pushing home prices to another all-time high.
The National Association of Realtors (NAR) said on May 11 local time that existing-home sales in April came to 4.02 million units on a seasonally adjusted annual rate basis. That was just a 0.2% increase from the previous month. The market had expected a rise of more than 3%, but the result fell far short of those forecasts. Compared with the same period last year, sales were essentially unchanged.
The data are based on completed transactions, so most of the contracts signed in late February and March were reflected. At the time, the 30-year fixed mortgage rate was in the high 5% range, but it rose quickly as the war between the United States, Israel, and Iran intensified. Mortgage rates are now around 6.42%.
Lawrence Yun, NAR's chief economist, explained that "improved housing affordability gave sales a slight boost, even amid mixed macroeconomic conditions, including record-high stock prices and historically low consumer confidence." He added, "Mortgage rates are lower than they were last year, and wage growth is outpacing home-price gains."
The problem is that the supply shortage remains severe. Housing inventory in April rose 5.8% from the previous month, but the increase was only 1.4% from a year earlier. Current supply stands at 4.4 months. That is well below the six-month level generally seen as a balanced market.
Yun said, "Inventory needs to rise by at least 30%, but we still do not see that trend," adding, "It is not as intense as it was a few years ago, but multiple bids are still appearing."
The average time a home stayed on the market in April was 32 days, up from 29 days a year earlier. First-time buyers accounted for 33% of all transactions, slightly down from last year. Cash purchases made up 25% of total sales, unchanged from a year ago.
As the supply shortage continued, home prices hit another record. The median price of an existing home in April was $417,700, up 0.9% from a year earlier. That is the highest April price ever recorded by NAR.
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pride@fnnews.com Lee Byung-chul Reporter