April Home Sales Slow with High Mortgage Rates, Prices

By ALEX VEIGA, Associated Press Business Writer

Introduction to the Current Market

Sales of previously occupied U.S. homes fell in April, as elevated mortgage rates and rising prices discouraged prospective homebuyers during what’s traditionally the busiest time of the year for the housing market.

Existing Home Sales

Existing home sales dropped 0.5% last month, from March, to a seasonally adjusted annual rate of 4 million units, the National Association of Realtors said Thursday. The sales decline marks the slowest sales pace for the month of April going back to 2009 in the wake of the U.S. housing crisis. March’s sales pace was also the slowest for that month going back to 2009.

Comparison to Previous Years

Sales fell 2% compared with April last year. The latest home sales fell slightly short of the 4.10 million pace economists were expecting, according to FactSet.

Home Prices

Home prices increased on an annual basis for the 22nd consecutive month, although at the slowest rate since July 2023. The national median sales price rose 1.8% in April from a year earlier to $414,000, an all-time high for the month of April.

Affordability Condition

“The affordability condition is clearly hurting the market, particularly higher mortgage rates,” said Lawrence Yun, NAR’s chief economist.

Market Slump and Mortgage Rates

For the past three years, sales of previously occupied U.S. homes have been at about 75% of what they were before the pandemic. The market slump began in early 2022, when mortgage rates began to climb from pandemic-era lows. Homes sales fell last year to their lowest level in nearly 30 years.

Average Mortgage Rate

The average rate on a 30-year mortgage has remained relatively close to its high so far this year of just above 7%, which it set in mid-January, according to mortgage buyer Freddie Mac. The average rate’s low point so far was five weeks ago, when it briefly dropped to 6.62%. This week, it averaged 6.86%, its highest level since mid-February.

Impact of High Mortgage Rates

Homes purchased last month likely went under contract in March and April, when the average rate on a 30-year mortgage ranged from 6.62% to 6.83%. High mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have frozen out many would-be homebuyers struggling to find a home they can afford.

Homeownership and Inventory

Homeownership is out of reach for many Americans after years of surging home prices. The median U.S. home sales price has jumped 53% over the past six years. Home shoppers who can afford to buy at current mortgage rates are benefiting from more homes on the market when compared with recent years.

Unsold Homes

There were 1.45 million unsold homes at the end of last month, a 9% increase from March, and 20.8% higher than April last year, NAR said. That’s the most homes on the market since September 2020, but it’s still well below the roughly 2 million homes for sale that was typical before the pandemic.

Market Supply and First-Time Homebuyers

The latest unsold inventory snapshot translates to a 4.4-month supply at the current sales pace, up from a 3.5-month pace at the end of April last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers. One reason the inventory of homes for sale has been rising is that properties are taking longer to sell. Homes typically remained on the market for 29 days last month before selling, up from 26 days in April last year, NAR said.

Sales Among First-Time Homebuyers

The wider selection of homes on the market likely helped boost sales among first-time homebuyers. They accounted for 34% of sales last month, the highest level since July 2020, but that is still down from the historical norm of 40%.

All-Cash Purchases

Home shoppers who can afford to sidestep mortgage rates and pay all cash for a home accounted for 25% of sales last month, down from 28% a year earlier. Investors, who account for many all-cash purchases, made up 15% of homes sold last month, down from 16% a year earlier, NAR said.

Conclusion

The housing market continues to face challenges as high mortgage rates and rising prices discourage potential buyers. While there is a slightly larger inventory of homes for sale, which could benefit buyers, the market remains unbalanced, with prices still out of reach for many Americans. The future of the market will depend on how mortgage rates evolve and whether home prices can stabilize or decrease to make homeownership more accessible.

FAQs

• Q: What was the rate of existing home sales in April?
  A: Existing home sales dropped 0.5% last month, from March, to a seasonally adjusted annual rate of 4 million units.
• Q: How have home prices changed?
  A: Home prices increased on an annual basis for the 22nd consecutive month, although at the slowest rate since July 2023, with the national median sales price rising 1.8% in April from a year earlier to $414,000.
• Q: What is the current average rate on a 30-year mortgage?
  A: The average rate on a 30-year mortgage averaged 6.86% this week, its highest level since mid-February.
• Q: How many unsold homes were on the market at the end of April?
  A: There were 1.45 million unsold homes, a 9% increase from March, and 20.8% higher than April last year.
• Q: What percentage of sales were made by first-time homebuyers?
  A: First-time homebuyers accounted for 34% of sales last month, the highest level since July 2020.

  Originally Published: May 22, 2025 at 10:24 AM EDT