April 2018 Existing Home Sales

Existing homes sales were disappointing to start the second quarter of 2018 after moving higher in both February and March.  Month-over-month, transaction volume fell 2.5 percent in April.  Even more disappointing is the year-over-year tally which also fell, dropping 1.4 percent and declining for a second consecutive period.

Three of the four regions fell.  Northeast sales dropped 4.4 percent and are now 11.0 percent below the year-ago tally.  Transactions in the West fell 3.3 percent and are down 0.8 percent in the past twelve months.  The South experienced a 2.9 percent decline, but sales are up 2.2 percent from a year earlier.  Finally, Midwest transactions were the best of the group in April, coming in as unchanged, but they fell 3.0 percent versus April 2017.

Inventories improved but remain relatively low.  Rising 9.8 percent in the period, there are now 1.8 million units for sale across the nation.  However, this is still 6.3 percent lower than a year ago.  April is the 35^th consecutive month of year-over-year declines in inventories. 

Borrowing costs were higher as well.  According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage increased for the seventh month in a row.  Reaching 4.47 percent in April, this is the highest rate since September 2013.

This indicator will get a closer watch from Atlas in the months ahead.  Seeing its year-over-year trend fall for two consecutive periods is not encouraging.  While the direct economic impact is relatively small when an existing home is sold, there are many knock-on effects.  Additionally, this indicator could be providing an early warning of Americans’ response to higher interest rates.  While the absolute level of borrowing costs is low when looking back decades, consumers may have grown accustomed to the ultra-low rates of the past few years and could be beginning to revolt.