US Home Sales Sink To 6-Month Low As High Rates Rattle Buyer Confidence

The US housing market witnessed a slowdown in April, with sales of existing homes dropping to the lowest level in six months. This slump is attributed to high interest rates and dwindling consumer confidence.

What Happened: Sales of existing homes in April dipped by 0.5% from March, reaching a seasonally adjusted annualized rate of 4 million units, as per data from the National Association of Realtors. This represents the slowest pace since last October, marking a 2% decrease from April of the previous year.

Contrary to predictions by housing economists for a 2.7% gain, the sales count, likely based on closings signed in February and March, declined prior to the rise in mortgage rates in April. “Home sales have been at 75% of normal or pre-pandemic activity for the past three years, even with seven million jobs added to the economy,” said Lawrence Yun, NAR’s chief economist.

See Also: Kevin O’Leary Warns Trump’s ‘Big, Beautiful Bill’ Could Be ‘Devastating’ For Small Businesses: ‘Somebody’s Got To Raise The Red Flag’

Housing inventory rose 9% in April from March and was nearly 21% higher than a year earlier. The median price of an existing home sold reached $414,000, a modest 1.8% gain from last year.

“At the macro level, we are still in a mild seller’s market,” Yun added. “But with the highest inventory levels in nearly five years, consumers are in a better situation to negotiate for better deals.”

Why It Matters: The report showing a slowdown in home sales comes on the heels of a surge in mortgage rates. Mortgage rates reached a three-month high as long-term U.S. Treasury yields surpassed the critical 5% mark this week, driven by rising deficits and fiscal policy fears. This led to a 5.1% drop in mortgage application volumes for the week ending May 16, marking the steepest decline in a month.

Despite the overall slowdown, some companies like Toll Brothers Inc. (NYSE:TOL) reported strong Q2 results. The company’s quarterly earnings and revenue surpassed analyst estimates, indicating that some housing market segments are still performing well despite the broader downturn.

Read Next:

• Pro-Trump Crypto Enthusiasts Slam Trump’s Memecoin Dinner As ‘Distasteful’ And An ‘Unnecessary Distraction’

Photo: Shutterstock