Existing-Home Sales Down 2.7% in April, Limited Housing Supply

This morning's release of the April Existing-Home Sales showed that sales fell to a seasonally adjusted annual rate of 5.85 million units from the previous month's 6.01 million. The Investing.com consensus was for 6.09 million. The latest number represents a 2.7% decrease from the previous month and its third in a row.

Here is an excerpt from today's report from the National Association of Realtors.

WASHINGTON (May 21, 2021) – Existing-home sales waned in April, marking three straight months of declines, according to the National Association of Realtors®. All but one of the four major U.S. regions witnessed month-over-month drops in home sales, but each registered double-digit year-over-year gains for April.

Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 2.7% from March to a seasonally-adjusted annual rate of 5.85 million in April. Sales overall jumped year-over-year, up 33.9% from a year ago (4.37 million in April 2020).

"Home sales were down again in April from the prior month, as housing supply continues to fall short of demand," said Lawrence Yun, NAR's chief economist. "We'll see more inventory come to the market later this year as further COVID-19 vaccinations are administered and potential home sellers become more comfortable listing and showing their homes. The falling number of homeowners in mortgage forbearance will also bring about more inventory.

"Despite the decline, housing demand is still strong compared to one year ago, evidenced by home sales from this January to April, which are up 20% compared to 2020," Yun continued. "The additional supply projected for the market should cool down the torrid pace of price appreciation later in the year." [Full Report]

For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed's FRED repository and is now only available for the last twelve months.

Existing Home Sales

Over this time frame, we clearly see the Real Estate Bubble, which peaked in 2005 and then fell dramatically. Sales were volatile for the first year or so following the Great Recession.

The Population-Adjusted Reality

Now let's examine the data with a simple population adjustment. The Census Bureau's mid-month population estimates show a 19.2% increase in the US population since the turn of the century. The snapshot below is an overlay of the NAR's annualized estimates with a population-adjusted version.

Existing Home Sales Growth

Existing-home sales are 11.9% above the NAR's January 2000 estimate. The population-adjusted version is 5.0% below the turn-of-the-century sales.

Existing-Home Sales Median Prices for Single Family Homes

We've added a chart for the last 12 months of Existing-home sales median prices for single-family homes for reference.

The next release of existing home sales will be on June 22.