US existing home sales slide 2.5% in April

Sales of US existing homes slid in April after two straight months of increases, according to data from the National Association of Realtors.

Sales fell by 2.5% to a seasonally-adjusted annual rate of 5.46m in April. Economists had been expecting a level of 5.57m.

On the year, sales were 1.4% lower and have fallen year-over-year for two straight months.

The median price of an existing home was $257,900, up 5.3% from April 2017's $245,000 and marking the 74th straight month of year-over-year gains. Meanwhile, total housing inventory at the end of April rose 9.8% to 1.80m existing homes available for sale, but was still down 6.3% compared to a year ago and has fallen year-over-year for 35 consecutive months.

Lawrence Yun, NAR chief economist, said: "The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home.

"Realtors say the healthy economy and job market are keeping buyers in the market for now even as they face rising mortgage rates. However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford."

Yun said that what is available for sale is going under contract at a rapid face.

"Since NAR began tracking this data in May 2011, the median days a listing was on the market was at an all-time low in April, and the share of homes sold in less than a month was at an all-time high."

Pantheon Macroeconomics analyst Ian Shepherdson said: "The consensus always looked like a stretch, given the weakness of the pending sales index, which pointed to sales close to 5.40M. It has understated existing sales in recent months, though, so it appears not to have been taken seriously. All the drop is in single-family sales, down 3.0% to 4.84M, the lowest since January.

"Sales might nudge up a bit over the next few months but the big picture here is that the trend probably has now peaked for this cycle, under the weight of higher mortgage rates and slightly tighter mortgage lending standards. In due course, the levelling-off in home sales will be a drag on retail sales of building materials, furniture and other housing-sensitive items. In the meantime, inventory remains very low - still falling, slowly - so prices will continue to rise by 5-to-6% y/y."