U.S. Existing Home Sales (April 2023)

Existing Home Sales Fall for Second Month in a Row in April

• Existing home sales fell 3.4% month-on-month (m/m) to 4.28 million units (annualized) in April, broadly in line with market expectations. Activity is down 23% compared to a year ago, but still up 7% from the recent cycle low of 4.0 million recorded in January.  
• Single-family home sales fell 3.5% to 3.85 million units in April, while sales in the smaller condo/co-op segment fell 2.3% to 430k units.
• Activity deteriorated across all regions, with sales down 6.1% in the West, 3.4% in the South and 1.9% in the Northeast and Midwest. 
• There were 1.04 million homes available for sale in April – up 7.2% from March and 1.0% from a year ago. Measured at the current sales rate and seasonally adjusting, unsold inventory sat at 2.9 months' supply – up from 2.8 in March and 2.2 months in April of last year. Properties remained on the market for 22 days in April, down from 29 days in March but up from 17 days in April 2022. 
• The median existing home price was 1.7% lower from the year-ago level, marking the third decline on a year-on-year (y/y) basis. However, after seasonally adjusting, the median price was up modestly for the second month in a row.  

Key Implications

• The fact that home sales would pull back for a second month in April was telegraphed by an earlier pullback in 'pending' home sales (April's closed sales were tied to contracts signed several weeks earlier). Changes in mortgage rates can make or break a purchase, and the increase in mortgage rates in March, together with the confidence hit from the regional banking crisis, appear to have taken a toll on activity. From a glass-half-full approach, the one positive tidbit of news is that sales are no longer setting new lows, but instead appear to have found a bottom on a trend basis.
• Low inventories are also weighing on sales activity. Regional differences aside, determined buyers with adequate resources are not wasting much time in snatching up homes that come on the market, nor do they appear to be negotiating too aggressively. The recent decline in the time that homes spend on the market and the modest uptick in the seasonally-adjusted median home price speak to the still-tight market conditions, which likely have a bit more room to run. As the labor market cools in the second half of the year we expect price pressures will be more sluggish. 

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