If it seems like your listings are in short supply, it may be because they are. According to the National Association of Realtors, low supply levels are toying with the real estate marking, holding down existing home sales in April while also pushing the median number of days a home was on the market to a new low of 29 days.
According to NAR, total existing-home sales fell 2.3 percent to a seasonally adjusted annual rate of 5.57 million in April from a downwardly revised 5.70 million in March.
However, even with the drop in April, sales remain 1.6 percent above 2016 levels and are at the fourth highest pace over the past year.
Lawrence Yun, NAR chief economist, explained that every major region except for the Midwest saw a retreat in existing sales in April.
“Last month’s dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2 percent, and new and existing inventory is not keeping up with the fast pace homes are coming off the market,” he said. “Demand is easily outstripping supply in most of the country and it’s stymieing many prospective buyers from finding a home to purchase.”
The trends also are impacting the median price for existing homes. In April, that mark stood at $244,800, up 6 percent from the same month last year, when the price stood at $230,900. According to NAR, April’s price increase marks the 62nd straight month of year-over-year gains.
Agents may be finding listings, with NAR reporting total existing housing inventory as April came to a close standing at 1.93 million, up 7.2 percent. However, this level is down 9 percent over last year, when 2.12 million existing homes were available. Unsold inventory is at a 4.2-month supply at the current sales pace.
According to Yun, Realtors remain frustrated as clients find few homes for sale.
“Homes in the lower- and mid-market price range are hard to find in most markets, and when one is listed for sale, interest is immediate and multiple offers are nudging the eventual sales prices higher,” he said.
According to NAR, homes remained on the market for 29 days during April, down five days from March, when it was at 34 days. The time on market stood at 39 days a year ago.
April’s figure surpassed May 2016, when homes remained on the market for 32 days as the shortest period since NAR started tracking that statistic in 2011.
Real estate agents also are finding that contracts to buy existing homes continue to slide. In April, contracts fell for a second straight month amid a supply squeeze. One area that is supporting the housing market recovery is a strong labor market.
Coming on the heels of recent data showing a drop in home building and sales of both new and previously owned homes, the decrease in contracts suggests a moderation in housing activity. Still, housing is expected to contribute to gross domestic product this year.
“We think that the housing recovery will continue over time based on favorable fundamentals in the market, but we have seen some weakening in a number of home sale measures lately,” said Daniel Silver, an economist at JPMorgan in New York.
Demand for housing is being driven by a tight labor market. This is indicated by a 4.4 percent unemployment rate, which is generating wage increases and boosting employment opportunities for young Americans.
Moreover, the housing market remains supported by historically low mortgage rates, with the 30-year fixed mortgage rate hovering at the 4 percent mark, the lowest level since last November.
And this will remain a silver lining for agents as the summer buying season heats up in June.