The American housing market is broken—and 3 years in, it’s starting to look permanent

Existing home sales edged up 0.2% last month from March to a seasonally adjusted annual rate of 4.02 million units, the National Association of Realtors said Monday. Sales were unchanged compared to April last year.

The latest sales figure fell short of the roughly 4.12 million pace economists were expecting, according to FactSet.

Sales have been hovering close to a 4-million annual pace now going back to 2023, far short of the historic norm that is closer to 5.2-million.

And home prices continued to rise nationally last month, albeit at a slower rate. The U.S. median sales price increased 0.9% in April from a year earlier to $417,700, an all-time high for any April on data going back to 1999, NAR said. Home prices have risen on an annual basis for 34 months in a row.

The U.S. housing market has been in a slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes were essentially flat last year, stuck at a 30-year low. They have remained sluggish so far this year, declining from a year earlier through the first three months of this year.

“This spring homebuying season, so far all the way through April, we can say we are not predicting any increase compared to one year ago,” said Lawrence Yun, NAR’s chief economist.

Inventory squeeze hurts the market

Homes purchased last month likely went under contract in February and March, when the average rate on a 30-year mortgage ranged from 5.98% — its lowest level in three and a half years — to 6.38%, according to mortgage buyer Freddie Mac. The average rate was at 6.37% last week.

While the average rate has remained below where it was a year ago, it has been fluctuating since the war with Iran began, as surging energy prices fuel anxiety about higher inflation.

Those who can afford to buy are benefiting from more properties on the market, although home inventory levels remain well below historical norms.

There were 1.47 million unsold homes at the end of April, up 5.8% from March and up 1.4% from April last year, NAR said. That’s the most homes on the market for the month of April going back to 2019, when the month-end inventory stood at 1.83 million homes.

Even so, that’s still short of the roughly 2 million homes for sale that was typical before the COVID-19 pandemic.

April’s month-end inventory translates to a 4.4-month supply at the current sales pace. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.

“We really need to see 30% growth in inventory, but we’re not really seeing that,” Yun said.