After a month of impressive home sales, April saw a drop in the total number of existing homes sold.
Despite the decrease, April was still one of the best months for purchasing an existing home in the past year.
Last month, existing home sales dropped 2.3%, largely a result of the lack of homes available for sell. There has been a housing shortage for a few years now, and as long as mortgage rates continue to hold low, there’s nothing stopping this shortage from getting worse.
Also, we are approaching the busy summer buying season. Home sales are going to get even tighter in the coming months since the supply of homes can’t match the demand.
This isn’t good news for prospective home buyers. As fewer homes are made available, it becomes more expensive to purchase any home.
But this isn’t necessarily the case across the country. In the midwest, the number of existing homes sold actually rose this past month, showing that some areas of the country are still seeing a large number of homes hitting the market.
Fortunately, mortgage rates are still low. If home buyers find the ideal home, they can save by cashing in on historically low rates.
About Existing Home Sales
Each month, the National Association of Realtors (NAR) tracks the number of homes sold. The existing home sales report is part of this, and it tracks all homes that are not newly built. This includes houses, townhouses, co-ops and condos.
Last month, the total number of existing homes sold dropped. However, it is worth noting that April’s home sales were still better than home sales at this time last year.
According to the report, the dip in home sales now puts the housing market on track for a seasonally adjusted annual rate of 5.57 million homes sold.
Along with this news, the median number of days that homes stay on the market also decreased.
The NAR reported that existing homes were on the market for a median of 29 days, a clear sign that the seller’s market is continuing to get worse for home buyers.
The demand for housing is simply too high, and there aren’t enough existing homes coming onto the market to match demand.
New home sales are also struggling, largely because there isn’t enough labor to physically build new homes.
Unfortunately, this problem seems like it will get worse before it gets better. Home buyers will want to lock in on a home as soon as they can to avoid extending their home search by weeks, and potentially months.
The Seller’s Market Grows
At the market’s current pace, the unsold inventory of existing homes is at a 4.2-month supply.
In this fictional statistic, the NAR measures how long it would take for every existing home to sell in the nation at the current pace without any new homes being introduced to the market.
Naturally, the scenario is unrealistic. However, it does help demonstrate just how few homes are available, especially since the same statistic showed a 4.6-month supply in April of 2016.
No matter which way you approach it, it is becoming harder for home buyers to find homes. This is forcing costs higher, but also keeping mortgage rates low.
It is worth noting that not all areas will be as tight as others. Major cities, such as San Francisco and New York, have far fewer homes available for sale than other areas.
Home buyers shouldn’t let this discourage them from their goal. If someone wants to purchase a home, it is slowly becoming a “now or never” type scenario. Home prices will continue to rise, and the number of available homes will continue to shrink.
Those serious about buying a home should check today’s rates to help them see how much home they can afford.
Current Mortgage Rates
Mortgage rates were rising through the beginning of 2017, but they have recently dropped to much lower levels.
Also, current rates are much lower than they have been historically. Rates are expected to rise throughout the year, so keeping track of rates could help when looking to buy a home.