Despite the fact that many people are definitely looking to buy a new home, the lack of available inventory is keeping many of those would-be buyers on the sidelines for the time being. As a result, existing home sales just fell for the third month in a row.
According to a new report from the National Association of Realtors, existing home sales fell by 2.7% in April. Existing home sales also fell in March and February, marking an unwelcome trend at a time when home sale usually escalate.
As for why April was the third straight month of declining existing home sales, NAR Chief Economist Lawrence Yun said that inventory is the main culprit.
"Home sales were down again in April from the prior month, as housing supply continues to fall short of demand," Yun said. "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.”
Speaking of inventory, there may actually be a bit of good news on that front. According to NAR’s report, total housing inventory rose by 10.5% in April compared to March, indicating that more homes starting to hit the market.
However, the increase in April was not nearly enough to make up for the shortages seen in the market, as inventory is still dramatically lower (down 20.5%) than it was last year at this time.
The properties that do hit the market continue to sell very quickly. According to NAR’s report, 88% of homes sold in April 2021 were on the market for less than 30 days. Overall, properties typically stayed on the market for 17 days in April, down from 18 days in March and 27 days in April 2020.
Given how quickly the homes that do become available sell, home prices also continue to set new records. According to NAR’s report, the median sales price for an existing home was $341,600 in April, which is a new record high and up 19.1% from April 2020 ($286,800).
But Yun says that more inventory is coming, which should help alleviate the price increases.
"The additional supply projected for the market should cool down the torrid pace of price appreciation later in the year," Yun said.