Buyers thought spring would bring a break. It did not.
April home sales barely moved, prices hit a fresh record, and the start of the Iran war pushed mortgage rates back above 6%.
Existing home sales rose 0.2% in April to 4.02 million units, on a seasonally adjusted, annualized basis. Analysts had expected a gain of more than 3%.
Sales were also flat year over year, and the median sale price hit $417,700. That is up 0.9% from last April and the highest the National Association of Realtors has ever recorded for the month.
Inventory grew, but barely. Supply rose 5.8% from March and just 1.4% from last April, leaving a 4.4-month supply on the market.
A balanced market sits at six months of supply. "We really need to see 30% growth in inventory, but we are not seeing that," said NAR's chief economist Lawrence Yun.
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April closings reflect contracts signed in late February and March, when mortgage rates ended the month in the high 5% range.
Then the Iran war started, rates jumped sharply, and the 30-year mortgage rate opened this week at 6.42%.
That math hits affordability fast. A higher rate on a record-priced home means a bigger monthly payment, even when income growth is technically outpacing price gains.
First-time buyers held a 33% share of sales, down slightly from last year, while all-cash sales held at 25%.
Yun said multiple offers are still happening but are not as intense as a few years ago.
Pending sales rose a bit in April and May, which usually signals stronger closings to come. But supply is tightening again, which Yun expects to keep pushing prices higher.
Days on market crept up to 32 days from 29 a year ago, suggesting buyers are taking their time on decisions.
For investors watching homebuilders and mortgage lenders, the read is mixed. Higher rates compress demand, but tighter supply keeps a floor under prices and earnings.
The April reading is also the first full month to capture the rate spike that followed the start of the Iran war. May closings will reflect contracts signed with 6%+ rates already baked in, which could pull sales lower.
That puts pressure on builders to use price cuts and rate buydowns to keep traffic moving. The earnings reports from the major homebuilders next quarter will show how aggressive the discounting has gotten.
Rent versus buy math also shifts at these rates. A monthly mortgage payment on a median-priced home with 20% down now runs well above the typical rent in most metros, which keeps would-be buyers in the rental market longer.
The headline number is flat. The pressure under it is not.
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