Sales of existing homes in the US fell in April from a month earlier

On May 22, local time, the National Association of Real Estate Brokers released a set of data showing that the sales of existing homes in the United States fell by 1.9% in April this year, and the sales volume was lower than market expectations, which caused widespread concern.

In terms of data, all four major regions of the United States showed month-on-month declines, but on a year-over-year basis, sales declined in the Northeast, Midwest and South, while they increased in the West. This could mean that there are different dynamics in the housing market in different regions.

In addition, data show that the inventory of existing homes in the United States is increasing, and it will take 3.5 months to run out. That could put some pressure on home sales, as consumers may be more cautious about buying homes when inventory builds up.

These economic data give us important clues about the state of the U.S. housing market. However, it should be noted that the housing market is affected by a variety of factors, and it is necessary to consider various factors to make an accurate judgment. The author analyzes the following factors that affect the sales volume of existing homes in the United States.

High mortgage interest rates: Affected by the Federal Reserve's successive interest rate hikes to combat inflation, mortgage interest rates have risen, weakening the purchasing power of potential home buyers, resulting in reduced demand for home purchases. High mortgage rates have increased the cost of buying a home, which has become a significant burden for many buyers, so they may choose to delay their purchase plans.

Low inventories: While inventories have grown, they remain low relative to demand. The lack of inventory has left buyers facing greater competition, likely pushing up prices and further depressing sales growth.

Consumer Confidence: Consumer concerns about the future economic outlook may also be influencing home buying decisions. In an uncertain economic environment, consumers may be more cautious about considering home purchase plans, leading to lower sales volumes.

It should be noted that the above factors are not isolated, and there may be mutual influence and superposition effect between them. So what are the implications of a month-on-month decline in existing home sales?

Housing correction: A drop in existing home sales could mean that the housing market is undergoing a certain correction. This could lead to a slowdown in house price growth and even a fall in some areas. However, because inventory is still relatively low, home prices may not fall sharply immediately, but may remain stable or decline slightly.

Slowing Economic growth: Real estate is an important part of the U.S. economy, and a decline in its sales could have some impact on overall economic growth. A slowdown in the housing market could lead to related industries, such as construction and financial services, taking a toll on employment and economic growth.

Falling Consumer confidence: A drop in existing home sales could further weigh on consumer confidence. Buyers may become worried about the market outlook and further reduce their willingness to buy, creating a vicious circle. This could lead to a downturn in the entire housing market.

Credit market impact: As existing home sales decline, banks and other financial institutions may face increased risk of loan defaults. That could lead financial institutions to tighten credit policies, further dampening demand for home purchases.

Overall, the impact of the decline in existing home sales is multifaceted. Some experts believe that only the Federal Reserve cut interest rates, so that mortgage interest rates fall, in order to truly solve the current real estate market problems.