Housing market broke 5 records in April due to inventory shortage

The housing inventory shortage is so extreme and demand is so strong that in the unlikely event that both trends were to reverse course, it will remain a historically strong sellers' market, a Redfin report said.

Five records were set in April, including the national median sales price reaching an all-time high of $370,528, an increase of 5.1% over March's $356,175, and 22.2% over approximately $303,000 in April 2020.

Even as the nation speeds up reopening businesses and schools, the story around housing remains the same: there aren't enough properties for sale for everyone who has the desire and the means to buy one, said Daryl Fairweather, Redfin's chief economist.

"Until new construction takes off — over the course of years, not months — home prices will continue to increase," Fairweather declared in a press release. "This housing boom is nowhere close to over."

Comparisons with April 2020's data were influenced by the initial pull-back in the housing market in the early days of the pandemic, which was quickly reversed as interest rates fell to record lows.

The number of homes for sale fell to an all-time low of 1.36 million on a seasonally adjusted basis. This is down 3.9% from March and 27% from April 2020.

Meanwhile, the average number of days a house remained on the market also hit a never-before-seen low, declining to 19 compared with 26 days in March and 35 days one year ago.

The shortage also resulted in nearly half of all properties, 49%, selling above their listing price, another record. Finally, the average sale-to-list ratio, which measures how close homes are selling to asking prices, hit a record high of 101.6%.

The number of new listings in April increased 6% from March, to 728,538. This was more than the number of properties sold during the month of 608,893. But the supply remained unchanged from March at 1.1 months, well below the equilibrium point of 6 months.

And even with that increase in new listings, there is no indication that the shortage is going to end anytime soon, said Mark Fleming, chief economist at First American, in a separate blog posting.

The average tenure length — the amount of time a person remains in their home after buying it before deciding to move again — was at an all-time high of 10.5 years, according to the company’s March analysis.

"It will take years of accelerated new home construction to close the gap from a decade of underbuilding, and an end to the pandemic by itself is unlikely to bring enough sellers to the market to bridge the gap between supply and demand," Fleming said. "In short, the housing inventory shortage is here to stay."