Home Sales Dip In April Despite Increased Supply

In April, sales of previously owned homes declined unexpectedly by 1.9% compared to March, totaling 4.14 million units, contrary to forecasts for a slight increase. These figures also marked a 1.9% decrease from April 2023. The drop in sales can be attributed to the impact of rising mortgage rates, which surged at the beginning of February and remained high throughout April, reaching unprecedented levels compared to pre-pandemic rates.

Despite a 9% increase in total housing inventory from the previous month and a 16% rise from the last year, housing supply remains tight, with just a 3.5-month supply at the current sales pace. Homes priced above $1 million saw a notable increase in sales activity, rising by 40% year over year, while sales of homes priced below $100,000 experienced a 7.1% decline. The median price of existing homes sold in April reached a record high of $407,600, up 5.7% from the previous year, reflecting strong demand and competitive bidding, with 27% of homes selling above the list price.

Weekly Refinance Demand Rises As Rates Hit 7-Week Low

Mortgage rates dipped for the third consecutive week, leading to a 1.9% increase in total mortgage application volume, primarily driven by a 7% surge in refinancing applications compared to the previous week. Despite the slight uptick, demand remains notably lower than historical averages, with rates still considerably lower than those offered today, maintaining the appeal of refinancing for many borrowers. While the decrease in rates spurred activity, especially in conventional and government refinance applications, home purchase mortgage applications dipped by 1% for the week and were 11% lower than last year, reflecting ongoing challenges such as low housing inventory and stiff competition in the housing market.

Joel Kan, MBA’s vice president and deputy chief economist, noted that while the drop in rates encouraged some borrowers to act, refinancing levels still lag behind historical averages. VA refinances experienced a notable increase for the third consecutive week but remain below their historical norms. Looking ahead, there is little anticipation of significant movement in mortgage rates, with market watchers expecting minimal impact from the Federal Reserve’s release of minutes on Wednesday. This trend underscores the current environment’s stability, characterized by high transparency and frequent communications from Fed members, which may dampen the potential for dramatic shifts in rates based on Fed communications.

Over 90% of Metro Areas See Home Price Growth in Q1 2024

In the first quarter of 2024, over 90% of metro markets saw increases in home prices despite facing the highest mortgage rates in two decades, according to the National Association of Realtors®. This growth was largely attributed to insufficient housing supply meeting high demand. The national median single-family existing-home price rose by 5% to $389,400 compared to the previous year, with significant increases observed in different regions such as the South, Northeast, Midwest, and West.

Despite improving affordability conditions due to declining mortgage rates, first-time buyers still encountered limited inventory and high home prices in the first quarter. The median monthly mortgage payment for a typical starter home with a 10% down payment loan slightly decreased to $1,998, but it was still 9.2% higher than the previous year. While affordability improved slightly in some areas, families needed varying qualifying incomes to afford homes, ranging from less than $50,000 to over $100,000, depending on the market.