Housing market update as existing home sales fall

Existing home sales continued to fall in April, at the peak of this year’s spring homebuying season, despite a significant rise in inventory, according to a new report by the National Association of Realtors (NAR).

As potential buyers remain on the sidelines in the face of rising prices and historically elevated mortgage rates, experts say that the U.S. housing market is finally on the verge of switching in their favor.

Why It Matters

The homebuying frenzy of the pandemic sent prices to the roof across the U.S., as a chronic lack of inventory forced buyers into ruthless bidding wars.

While the country still faces enough pent-up demand to keep the little inventory available on the market attractive, even at a very high price tag, mortgage rates hovering between the 6 percent and 7 percent marks are discouraging many from getting on the property ladder right now. Growing uncertainty around the future of the U.S. economy is adding further pressure on buyers, many of whom do not feel ready to make such a big purchase at the moment.

What To Know

Existing home sales fell 0.5 percent month-over-month to a 4 million seasonally adjusted annual rate in April, according to NAR, while dropping 2 percent from a year ago. First-time homebuyers were responsible for 34 percent of sales.

At the regional level, sales dipped month-over-month in the Northeast (-2 percent) and the West (-3.9 percent), while they grew in the Midwest (+2.1 percent) and remained unchanged in the South. They were down year-over-year in all regions but not the Northeast, where they remained unchanged.

In the same month, the number of unsold homes piling up on the market rose by 9 percent from the previous month to 1.45 million, the equivalent of 4.4 months’ supply at the current monthly sales pace.

Despite fewer sales, the median existing-home sales price rose 1.8 percent from a year earlier to $414,000, an all-time high for the month of April. The increase also marked the 22nd consecutive month of year-over-year price hikes.

At the regional level, prices increased in the Northeast (+6.3 percent year-over-year) and the Midwest (+3.6 percent year-over-year), while falling in the South (-0.1 percent year-over-year) and West (-0.2 percent year-over-year). The Northeast and the Midwest have the most acute housing shortages in the country.

What People Are Saying

NAR Chief Economist Lawrence Yun said in a press release shared with Newsweek: “Home sales have been at 75 percent of normal or pre-pandemic activity for the past three years, even with seven million jobs added to the economy. Pent-up housing demand continues to grow, though not realized. Any meaningful decline in mortgage rates will help release this demand.”

Realtor.com Chief Economist Danielle Hale said in a statement shared with Newsweek: “These April home sales likely went under contract in March and early April, when mortgage rates held in a very narrow range between 6.6 percent and 6.7 percent. Even before the big trade announcement on April 2, consumers had reported concerns about the outlook for personal financial situations and job security, which may have undermined their confidence in making a large purchase, such as a home. In addition, fluctuating stock prices in the wake of April 2 may have reduced some homeshoppers’ downpayment and closing funds.”

She added: “Home shoppers remain optimistic amid a growing number of homes for sale, but opportunities vary by region and price point. While there have been modest improvements in affordability, collaborative research from NAR and Realtor.com shows that gains have not been evenly spread across the income spectrum, with middle- and upper-middle income shoppers seeing improvement while the lowest income home shoppers see less affordability. Looking ahead, mortgage rates—a key determinant of affordability—seem likely to remain in a range where they are more likely to dampen than bolster home sales in the near term.”

Bill Adams, chief economist for Comerica Bank in Dallas, Texas, said in a statement shared with Newsweek: “Shaky consumer sentiment in the first few months of 2025 likely weighed on sales in April. Sentiment is starting to improve after the partial rollback of tariffs. One of the first PMI surveys collected after China tariffs were cut on May 12 improved more than expected.”

He added: “The economic growth outlook is looking firmer than a few weeks ago. On top of tariff de-escalation, the 2026 fiscal bill is set to stimulate the economy with deficit-financed tax cuts. But for the Fed, a steadier growth outlook and more expansionary fiscal policy are reasons to forgo rate cuts.”

What Happens Next

Yun said that while the latest data on existing home sales show that the country is still “in a mild seller’s market,” the market now has “the highest inventory levels in nearly five years.” This signals that “consumers are in a better situation to negotiate for better deals,” Yun said.

Hale also believes that buyers are soon going to have more negotiating power and will be able to get better deals in most markets. “Potential sellers who overreach on price may have to adjust lower in order to attract a buyer in a market where months supply rose to 4.4 months range signaling more balance, in line with our forecast predictions for 2025,” she said.

Realtor.com expects an 11.7 percent increase in available homes for sale throughout 2025.