Existing Home Sales Slump As Prices Soar To Record Highs

Following yesterday's collapse in new home sales, NAR reports that existing home sales in April also disappointed - dropping 2.3% (and March revised lower). This drop happens as median home prices spiked 6.0% YoY to record highs as sales declines are blamed once again on a lack of supply (forget affordability?).

Highlights include:

  • Existing-home sales at 5.57m, vs est. of 5.65m
  • March at 5.7m; revised from 5.71m
  • Existing-home sales fell 2.3% after rising 4.2% prior month
  • 4.2 months supply in April vs. 3.8 in March
  • Inventory rose 7.2% to 1.93m homes
  • 1st-time buyers 34% of total sales; all cash 21%; investors 15%
  • Distressed sales 5% of total sales

Don't be too surprised...

The median existing-home price for all housing types in April was $244,800, up 6.0 percent from April 2016 ($230,900). April's price increase marks the 62nd straight month of year-over-year gains.

However, as has traditionaly been the case, the bulk of price increases has been toward the upper end:

Total housing inventory at the end of April climbed 7.2 percent to 1.93 million existing homes available for sale, but is still 9.0 percent lower than a year ago (2.12 million) and has fallen year-over-year for 23 consecutive months. Unsold inventory continues to rise and is at a 4.2-month supply at the current sales pace.

Lawrence Yun, NAR chief economist, says every major region except for the Midwest saw a retreat in existing sales in April.

"Last month's dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2 percent, and new and existing inventory is not keeping up with the fast pace homes are coming off the market," he said.


"Demand is easily outstripping supply in most of the country and it's stymieing many prospective buyers from finding a home to purchase."

As a reminder, the May University of Michigan Consumer Sentiment survey showed a six-year low among those who think it’s a good time to buy a house and a 12-year high among those who say it’s a good time to sell. Disparities of this breadth tend to coincide with break points and that’s just where we’ve landed in the cycle.

The beginning of May officially marked the advent of a buyers’ market, defined simply as sellers outnumbering buyers by a wide enough margin to trigger falling prices. Yes, it’s the moment buyers have been waiting for. It is also the moment private equity investors, those who’ve crowded out natural buyers, have been dreading.