In April, existing home sales fell 2.5% to an annualized rate of 5.46 million. On its own, this is not a remarkable story.
What is more notable is the persistence of a trend that has come to define the U.S. housing market since it bottomed in 2012. And that is the lack of supply.
In April, the median existing home price rose 5.3% over the prior year, the 74th straight month there’s been an annual increase in the price of already-built homes, according to the data from the National Association of Realtors.
Additionally, the amount of homes for sale fell over the prior year for the 35th consecutive month to a total of 1.8 million.
At the current selling rate, which in April hit an annualized pace of 5.46 million, there are just 4 months of unsold inventory on the market and homes were for sale for just 26 days in April with 57% of homes sold remaining listed for less than a month.
“Inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford,” said Lawrence Yun, chief economist for the NAR.
“What is available for sale is going under contract at a rapid pace. Since NAR began tracking this data in May 2011, the median days a listing was on the market was at an all-time low in April, and the share of homes sold in less than a month was at an all-time high.”
So while one of the most pervasive economic memes of the post-crisis period has been of the basement-dwelling millennial — with this week’s news not doing the generation any favors — improvements in the labor market and wages haven’t been enough to overcome a housing market that is disadvantaging new entrants. Namely, millennials looking to own their first home.
“With mortgage rates and home prices continuing to climb, an increase in housing supply is absolutely crucial to keeping affordability conditions from further deterioration,” said Yun. “The current pace of price appreciation far above incomes is not sustainable in the long run.”