April home sales disappoint as higher mortgage rates weigh on buyers

• Sales reached 4.02 million units (annualized), falling far short of analyst expectations for 3%+ growth and remaining flat compared to the prior year
• Mortgage rates jumped sharply in April following the start of the U.S.-Israel-Iran conflict, after ending March in the high 5% range, contributing to buyer hesitation
• Housing inventory increased only 1.4% year-over-year to a 4.4-month supply, well below the 6-month level considered balanced, with economists noting a need for 30% inventory growth

Summary: April Home Sales Disappoint Amid Rising Mortgage Rates

Key Figures:

Previously owned home sales rose just 0.2% month-over-month in April to 4.02 million units (seasonally adjusted, annualized), significantly missing analyst expectations of over 3% growth. Year-over-year sales remained flat.

Market Drivers:

The disappointing results reflect the impact of sharply rising mortgage rates. The 30-year fixed mortgage rate ended March in the high 5% range but spiked in April due to the U.S.-Israel war with Iran. Current rates stand at 6.42%.

Housing Inventory:

• April inventory increased 5.8% from March but only 1.4% year-over-year
• Supply remains at 4.4 months (below the 6-month balanced market threshold)
• NAR Chief Economist Lawrence Yun noted inventory needs 30% growth to normalize the market

Pricing:

The median home price reached $417,700 in April, up 0.9% year-over-year—the highest April price on record. Average days on market increased to 32 days from 29 days last year, indicating buyers are more cautious. First-time buyers represented 33% of transactions.

Market Implications:

Despite record-high stock markets and improved affordability from income growth outpacing home prices, tight inventory and elevated mortgage rates continue constraining sales activity. Multiple offers persist, though less intense than previous years. The combination of limited supply and higher borrowing costs is expected to maintain upward pressure on prices in coming months.

The tepid sales growth suggests the housing market remains in a holding pattern as buyers navigate affordability challenges.