NAR: Existing-Home Sales Decreased to 5.61 million SAAR in April

Inventory down 10.4% year-over-year

From the NAR: Existing-Home Sales Retract 2.4% in April

Existing-home sales recorded a third straight month of declines, slipping slightly in April, according to the National Association of Realtors®. Month-over-month sales were split amongst the four major U.S. regions, with two areas posting gains and the other two experiencing waning in April. Year-over-year sales struggled, as each of the four regions reported dips.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, slid 2.4% from March to a seasonally adjusted annual rate of 5.61 million in April. Year-over-year, sales dropped 5.9% (5.96 million in April 2021).
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Total housing inventory at the end of April amounted to 1,030,000 units, up 10.8% from March and down 10.4% from one year ago (1.15 million). Unsold inventory sits at a 2.2-month supply at the current sales pace, up from 1.9 months in March and down from 2.3 months in April 2021.
emphasis added

The sales rate was close to consensus forecast.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in April (5.61 million SAAR) were down 2.4% from the previous month and were 5.9% below the April 2021 sales rate. Sales are back to pre-pandemic levels. An interesting question: did the recent ultra-low mortgage rates pull forward some demand over the last couple of years?

Sales Year-over-Year and Not Seasonally Adjusted (NSA)

The second graph shows existing home sales by month for 2021 and 2022.

Sales declined 5.9% year-over-year compared to March 2021. This was the eighth consecutive month with sales down year-over-year.

The third graph shows existing home sales for each month, Not Seasonally Adjusted (NSA), for a few selected periods. Black and light Purple are the maximum sales per month during the bubble (2005) and the minimum sales during the bust (2008 - 2011). The most recent four years are shown (2019 through 2022).

Sales NSA in April (464,000) were 9.6% below sales in April 2021 (513,000).   The seasonally adjusted decrease was less than the NSA decrease since there was one fewer selling day this year. This decrease, NSA, was similar to change in the markets I track each month.

Housing Inventory is Increasing Seasonally

The fourth graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 1.03 million in April from 0.93 million in March.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The fifth graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory is very low and was down 10.4% year-over-year (YoY) in April.  This includes some pending sales - and doesn’t exactly match some other measures - and it seems likely that inventory will be year-over-year in May.

Months-of-supply at 2.2 months is above the record low of 1.6 months set in January 2022, but still very low.

Median House Price Growth Still Strong

On prices, the NAR reported:

The median existing-home price3 for all housing types in April was $391,200, up 14.8% from April 2021 ($340,700), as prices increased in each region. This marks 122 consecutive months of year-over-year increases, the longest-running streak on record.

Median prices are distorted by the mix (repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices).

The YoY change in the median price peaked at 23.6% in May and slowed to 12.6% in October (still very strong increase in prices). But has picked up a little again, and the YoY increase in April was similar to the YoY increase in March.

A key milestone will be when inventory is up year-over-year (YoY). My current guess is inventory will be up YoY next month in the NAR report. Inventory will still be historically very low.

Also note that 30-year mortgage rates averaged 4.98% in April according to Freddie Mac. Now rates are around 5.45%. Sometimes people rush to buy as rates rise - anticipating further rate increases. However, eventually, higher rates will suppress demand. It seems likely we will see a further negative impact on sales from higher rates, and more inventory in the coming months.