Real estate prices in the US have fallen.

Sales showed some activity increasing slightly in February after a year-long decline caused by rising mortgage interest rates, but since then the momentum has weakened.

In April, sales of existing homes, including single-family homes, townhouses, flats and co-ops, fell 3.4% compared to March, ePlaza real estate portal reported. Annual sales were down 23 per cent year-on-year and seasonally adjusted annual sales fell from 5.57 million units a year ago to 4.28 million units in April.

The fall in sales in April indicates that the February revival, which ended the longest period of monthly declines in home sales in recorded history since 1999, was not a success. Mortgage interest rates rose in February and reached 7% in March, when a slew of April deals were completed.

Home sales have had some lift but remain above recent cyclical lows. The combination of job growth, tight supply on the market and fluctuating mortgage interest rates over the past few months has created a dual-demand environment for properties.

The pace of sales is currently higher than at the end of last year, when sales volumes hit a low of 4 million units. However, the current pace of sales is down 33% from a peak of 6.34 million units in January 2022.

At the same time, all four major US regions have seen both monthly and year-on-year declines in sales, but the decline is felt more in high value regions, where property prices have risen strongly over the past few years.

In the Northeast and Midwest, sales were down 1.9% compared to March, while the South saw a 3.4% decline and the West a 6.1% decline compared to the previous month. On a year-on-year basis, sales in the West fell by as much as 31%.

The good news for prospective buyers is that house prices continue to fall slightly. In April, the average price for existing homes of all types was $388,800, down 1.7% from April 2022. This is the biggest drop in house prices since January 2012.

However, prices and the level of competition in the property market are uneven across the US.

“Approximately half of the country is experiencing price increases,” ePlaza experts note. “Even in markets with lower prices, especially in the expensive regions of the West, we are seeing increased supply in the spring after a quieter winter. There are virtually no distressed and forced property sales.”

Property prices have risen in the North East and Mid West, but declined in the South and West. The average price in the Northeast rose 2.8% in April from a year ago to $422,700, while in the Midwest it rose 1.8% to $287,300. In the South, prices fell 0.6% to $357,900 and in the West they fell 8% from a year ago to $578,200.

The price declines are in regions where there has been an increase and now there is an adjustment for part of this significant increase.

The problem of low levels of affordable housing stock remains acute.

Spring is the most popular season for home sales and the number of available homes by the end of April had increased by 7.2% compared to March, reaching 1.04 million units.

However, the current inventory of existing homes is 44% lower than in April 2019, before the Coronavirus pandemic, when there were 1.8 million units available.

High mortgage rates are preventing some buyers from entering the market, but there is also a shortage of homes for sale, which is having a negative impact on sales volumes. And the two factors are linked.

Many current homeowners have mortgage rates a few percentage points below the average current rate of 6.35 per cent, and they are reluctant to give them up to buy a new home.

“New offers are not coming in,” notes Eplaza, adding that fewer new offers are coming onto the market each week than in the past.

The US property market remains relatively fluid, with properties on the market for an average of 22 days in April, up from 29 days in March but up from 17 days in April 2022. Most homes, namely 73%, sold below their original price in April.

Demand is still high, especially with such limited choices, Yoon noted, and some homes are selling above the initial price as a result of competition.

“Sales are down and prices are also down,” ePlaza experts said.

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