The pace of home sales pulled back in April, as the shrinking number of houses for sale and rising prices are putting them in a bind as their options dwindle.
The National Association of Realtors said Wednesday that sales of existing homes declined 2.3 percent last month to a seasonally adjusted annual rate of 5.57 million. Still, a stable job market has supported solid demand from buyers as home purchases are 1.6 percent higher than a year ago.
But the specter of fewer homes for sale is starting to squeeze the market. Would-be buyers are mobbing open houses as sales are occurring on the shortest timeline ever recorded by the Realtors. The inventory of homes for sale has declined on an annual basis for the past 23 months, creating a shortage that has pushed up prices above income growth.
“The demand side of the housing market is just fine, but the supply side is where the issues are,” said Richard Moody, chief economist at Alabama-based Regions Financial.
The number of properties listed for sale has plunged 9 percent over the past 12 months to 1.93 million. Homes are staying on the market for a median of just 29 days, the shortest period since the Realtors began tracking this metric in 2011. The fast-moving market has fueled rising home values that have priced some entry-level buyers out of the market.
The median sales price has risen 6 percent from a year ago to $244,800. But the sales volume of homes worth less than $250,000 has declined over the past year, while homes worth more than the median have experienced sales growth.
Sales declined last month in the Northeast, South and West, while rising in the Midwest.
As a result of the rising prices, it’s still cheaper to buy rather than rent, but the gap is narrowing.
The real estate firm Trulia released an analysis Wednesday finding that buying was more affordable in the 100 largest metro areas, provided the owner provided a 20 percent down payment and stays at least seven years. But rental prices were flat or falling in 93 of the metro areas, while home prices kept rising – such that it might soon be cheaper to rent than buy in high-priced markets such as Honolulu and the California Bay Area cities of San Francisco, San Jose and Oakland.
Relatively low mortgage rates still favor buying in many markets.
Mortgage buyer Freddie Mac said the average rate on 30-year fixed-rate home loans edged down to 4.02 percent last week from 4.05 percent the prior week. The rate was 3.58 percent a year ago and averaged 3.65 percent in 2016, the lowest level in records dating to 1971.