Source: Realtor.com
April 2023 Existing Home Sales:
What Happened This Month:
Sales of existing homes fell 3.4% in April to a pace of 4.28 million as buyers struggled to find homes that were a good fit for their needs and their budgets. After an upswing in February, mortgage rates eased in March, when many of the offers for homes sold in April would have been submitted. Nevertheless, average mortgage rates in March were about 25 basis points higher than in February, providing a modest additional headwind for buyers navigating still-high home prices. The pace of home sales continues to exceed the 4 million sales low reached in January, and still lags year ago sales by a considerable 23.2%, roughly in line with annual declines in the prior two months.
Sales Declines are Broad-based, but Price Trends Vary:
Home sales dipped in all four regions, falling the most in the West, where high sales prices hamper affordability. Nationwide, home prices dipped 1.7% to a median of $388,800, driven by a notable 8.0% drop in the West and a more modest 0.6% decline in the South. Median home sales prices in the Northeast (2.8%) and Midwest (1.8%) actually climbed higher. This regional performance mirrors trends in the rental market, which saw the biggest rent growth in the Midwest and more moderate growth, and even declines, in some Western and Southern markets.
Affordability Weighs but Market Shifts Create Opportunity:
As buyers navigate housing affordability, a dip in home down payments suggests two things: 1) it’s getting harder for buyers to keep up with costs, and 2) a less competitive housing market is opening up opportunities for buyers who are making somewhat smaller down payments. As is the case for many housing indicators, however, the point of comparison is important. Down payments are still considerably larger than was common before 2020.
The real estate market is a glass half-full, half-empty story for first-time home buyers. A drop in market competitiveness and easing down payments open the door a bit wider, but the hurdles to entry are still quite high for first-timers who don’t have existing home equity to leverage for a downpayment. Data show that on balance the optimistic factors pushed first-time homebuyer share up to 28% in April from 27% in March and 26% one year ago – one bright spot amid the market’s challenges. Fortunately, there are a number of assistance programs available to help buyers cobble together a down payment.
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