Sales of previously owned U.S. homes dropped unexpectedly in April for a third straight month as an inventory crunch pushed up prices by the most on record and restrained purchases.

Contract closings decreased 2.7 per cent from the prior month to an annualized 5.85 million, the slowest pace since June, according to Friday data from the National Association of Realtors. The median forecast in a Bloomberg survey of economists called for a 6.07 million rate in April.

Elevated asking prices, reflecting a limited number of homes on the market, are reducing affordability and constraining sales. Still, the pace of existing-home sales is above pre-pandemic levels, supported by borrowing costs that remain historically low.

The median selling price jumped 19.1 per cent from a year ago to US$341,600 in April. Both the annual increase and the median prices were records.

The sales decline in April “is due to the lack of homes on the market,” Lawrence Yun, NAR’s chief economist, said on a call with reporters. “Even with home sales declining modestly, one can describe the market as being hot.”

There were 1.16 million homes for sale at the end of last month, down 20.5 per cent from a year earlier. It would take 2.4 months at the current pace to sell all the homes on the market. A year ago, it was 4 months. Realtors see anything below five months of supply as a sign of a tight market.

Even with the decline in April, the housing market remains robust. On average, properties remained on the market for a record-low 17 days in April. Half of the homes listed are being sold above the asking price, Yun said, while 88 per cent of properties purchased were on the market for less than a month.

Another sign of the competitive nature of the housing market was an increase in the share of homes bought in all-cash transactions. A quarter of the properties purchased in April were settled with cash, up from 15 per cent a year ago.

Digging deeper

  • Sales of previously owned single-family homes dropped 3.2 per cent from a month earlier to a 5.13 million pace; purchases of condominiums rose 1.4 per cent
  • Three of four regions posted sales declines in April, led by a 3.9 per cent decrease in the Northeast and a 3.7 per cent drop in South. Contract closings fell 3.1 per cent in the West and increased 0.8 per cent in the Midwest
  • Existing-home sales account for about 90 per cent of U.S. housing and are calculated when a contract closes. New-home sales, which make up the remainder, are based on contract signings and will be next Tuesday