Home Sales Are Cooling, But Rising Prices Are Not

The decrease in home sales seems to directly correlate to the new mortgage rate climate, as home buying volume was down 15% between January and April of this year.

The average rate for a 30-year mortgage for the week ending May 20, 2021 was 3.0%, compared to the the average rate for the week ending May 19, 2022 of 5.3%. The difference costs a buyer with a $300,000 mortgage $400 more per month in principal and interest payments.

From July 2021 through February 2022, when mortgage rates were extremely favorable, the number of homes available for purchase steadily declined. Although the inventory of homes is still very low by historical measures, in April 2022 the number of existing homes for sale rose for the second straight month.

The historically low pipeline of available homes is sustaining the price growth trajectory, even as buying activity wanes.

The median sale price of existing homes between March and April of this year continued to rise, extending a streak of monthly increases dating back to July of 2020. The median home price reached $396,000 in April, which is up nearly 40% since the onset of the pandemic.