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Inventory Shortages Hinder Existing-Home Sales

05.26.2021

Existing-home sales dropped again in April, marking the third month in a row of decline, according to the latest numbers from National Association of Realtors (NAR).

Existing home sales are down 2.7% compared to March, landing at 5.85 million. Sales overall jumped year-over-year, up 33.9% from a year ago (4.37 million in April 2020).

The median existing-home sales price rose to 19.1% year-over-year to $341,600, both record highs.

NAR's report adds that, regionally, all but one of the four major U.S. regions experienced month-over-month drops in home sales, but each registered double-digit year-over-year gains for April.

"Home sales were down again in April from the prior month, as housing supply continues to fall short of demand," said Lawrence Yun, NAR's Chief Economist. "We'll see more inventory come to the market later this year as further COVID-19 vaccinations are administered and potential home sellers become more comfortable listing and showing their homes. The falling number of homeowners in mortgage forbearance will also bring about more inventory.

"Despite the decline, housing demand is still strong compared to one year ago, evidenced by home sales from this January to April, which are up 20% compared to 2020," Yun continued. "The additional supply projected for the market should cool down the torrid pace of price appreciation later in the year."

Total housing inventory remains a hindrance to home sales.

At the end of April, inventory amounted to 1.16 million units, up 10.5% from March's inventory yet down 20.5% from one year ago—the numbers These numbers represent near-record lows, according to NAR, which first began tracking the single-family home supply in 1982.

Newly listed properties continue to sell quickly, an average of 17 days in April. It was a month in which 88% of listed properties sold within a month.

First-time buyers represented 31% of sales in April, down from 32% in March and 36% in April 2020.

"First-time buyers in particular are having trouble securing that first home for a multitude of reasons, including not enough affordable properties, competition with cash buyers and properties leaving the market at such a rapid pace," Yun said.

All-cash sales accounted for 25% of transactions in April, up from both 23% in March and 15% in April 2020. Individual investors or homebuyers purchasing a second home, who account for many cash sales, purchased 17% of homes in April, up from 15% in March and 10% in April 2020, Yun added.

Foreclosures and short sales represented less than 1% of sales in April, equal to March's percentage but down from 3% in April 2020, according to the report.

Yun expects mortgage rates to remain below 3.5% through 2021.

NAR's report—featuring regional data and condo-vs.single-family breakdowns, to name a couple things—is available in full at NAR.realtor/research.

by Christina Hughes Babb (via www.themreport.com)

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