(Bloomberg) -- Sales of US existing homes unexpectedly fell for a second month in April, adding to evidence that the resale market is struggling for traction amid near-record prices and high borrowing costs.

Contract closings decreased 1.9% from a month ago to a 4.14 million annualized rate, according to National Association of Realtors data released Wednesday. The figure trailed the median estimate of 4.23 million in a Bloomberg survey of economists.

“Home prices reaching a record high for the month of April is very good news for homeowners,” NAR Chief Economist Lawrence Yun said in a statement. “However, the pace of price increases should taper off since more housing inventory is becoming available.”

The nascent recovery in demand from a 13-year low in October is being hindered by limited inventory that’s keeping asking prices elevated. In early 2021, annualized sales were running more than 2 million above the current pace, while mortgage rates were around 3% compared with 7% now.

Mortgage rates remained above 7% for a seventh straight week, according to the latest figures from the Mortgage Bankers Association. Until inflation moves closer to their goal, Federal Reserve policymakers have indicated they’re in no rush to lower borrowing costs.

Inventory has edged up a bit in recent months, as some sellers decide they can’t postpone their moves any longer, according to Yun. Still, it remains well below prepandemic levels. The supply of homes on the resale market increased more than 16% in April from the same month last year to 1.21 million.

At the current sales pace, selling all the properties on the market would take 3.5 months. Realtors see anything below five months of supply as indicative of a tight market.

Selling Price

The median selling price increased 5.7% from a year ago to $407,600 — the highest for any April in data back to 1999. Unlike in the new-home market, where rising inventories and the prevalence of incentives by builders have pushed prices down on an annual basis, the home-resale market is experiencing rising year-over-year price growth. 

“Unfortunately, prices continue to rise, further pushing the opportunity away from lower-income, and even middle-income Americans,” said Robert Frick, corporate economist at Navy Federal Credit Union. “The only real relief to the situation will come from the Fed cutting rates later this year, which will eventually filter through to mortgage rates.”

About 68% of the homes sold were on the market for less than a month, up from 60% in March, while more than a quarter sold above the list price. 

The NAR’s report also showed properties remained on the market for 26 days on average in April, down from 33 a month earlier and typical during the spring selling season. Sellers received an average of 3.2 offers.

One reasons why economists’ estimates may have been off is because they tend to base their projections on the pending-home sales report, which measures contract signings. Those rose in February and March.

In addition to the larger sample size in the existing-home sales report, Yun said that signings don’t always translate to closings because of things like home inspection contingencies, appraisals and potential issues with mortgage lenders. There also could be skittishness among buyers having second thoughts, he said.

Existing-home sales account for the majority of US housing and are calculated when a contract closes. The government releases April new-home sales figures on Thursday.

--With assistance from Chris Middleton.

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