US existing home sales dip in April, more declines anticipated

According to the National Association of Realtors, in seasonally adjusted terms existing home sales fell to an annual pace of 5.61m in April or by 2.4% month-on-month.

That was roughly in-line with the consensus among economists for a pace of 5.66m.

Lawrence Yun, chief economist at NAR, said that "higher" house prices and "sharply higher" mortgage rates were responsible for a reduction in buyer activity.

"It looks like more declines are imminent in the upcoming months, and we'll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years," he added.

Total housing inventory meanwhile jumped by 10.8% on the month, but remained down by 10.4% on their year earlier levels.

At the current pace of sales, inventory remained at the equivalent of 2.2 months' worth of supply, NAR said.

Nevertheless, in atypical fashion, listed homes continued to sell swiftly, Yun added.

Yun also said that here was an increasing number of buyers with short tenure expectations but cash buyers, which were not impacted by changes in mortgage rates, remained elevated.

The median price for all existing home types was 14.9% higher year-on-year at $391,200.

Commenting on the latest existing home sales figures, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "The third straight decline in sales is no fluke; activity is now clearly responding to the drop in mortgage demand, which indicates that bigger declines are coming, very soon.

"Sales are likely to drop below 5M by June, taking them clearly below the pre-Covid trend. The surge in mortgage rates has hammered affordability; the monthly payment on a median single-family existing home now is nearly 50% higher than on the same home last September, with two-thirds of the increase due to the spike in rates."