The US housing market faced challenges again in April, with existing home sales unexpectedly declining. This phenomenon is attributed to the impact of rising mortgage rates and continuously climbing home prices. Despite inventory levels reaching a two-and-a-half-year high, there continues to be a lack of entry-level homes in the market, leading to a second consecutive month of sales decline.

According to a report by the National Association of Realtors (NAR), home sales volume in April decreased by 1.9%, a figure that may reflect contracts signed in the previous two months. Despite economists' earlier predictions that existing home sales would rise to 4.21 million units, the actual figures fell short of expectations.

One of the main reasons for the downturn in the real estate market is the rise in mortgage rates. As investments in the US real estate market, including residential construction, saw the fastest growth in over three years in the first quarter, the increase in mortgage rates began to impact the market. Additionally, the market downturn is also linked to supply shortages, as supply constraints, along with insufficient demand, negatively affect sales.

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Despite inventory levels reaching a two-and-a-half-year high in April, entry-level homes are still scarce in reality. Many homeowners are reluctant to sell their homes due to over 75% of residential mortgage rates being locked in below 3%. Meanwhile, the average rate for a 30-year fixed-rate mortgage soared to 7.22% in early May, hitting a five-month high, leading to continued increases in mortgage rates.

The downturn in the real estate market is also reflected in housing construction. Data shows declines in both single-family housing starts and building permits issued in April. Furthermore, there has been a significant drop in home builders' confidence, indicating increased uncertainty in the market.

In the coming months, experts anticipate that existing home sales may stagnate or even further decline. This contrasts with expected growth in housing investment, which could lead to a significant slowdown in residential investment in the second quarter.

It should be noted that the situation in the US real estate market varies, but in the current environment, there is an increase in supply of homes priced over $1 million, while sales of lower-priced homes are declining. While some bargaining space still exists in certain property markets, overall uncertainty and challenges persist in the real estate market.