The market for existing homes was stuck in neutral in April, with fewer sales and soaring prices as high mortgage rates continued to stifle homebuying.

If homes sold at the rate they did in April, 4.14 million would be sold all year, a 1.9% decline from the rate in March, the National Association of Realtors said Wednesday. Despite slow 💟sales, prices continued climbing: the median-priced home sold🌌 for $407,600, the highest ever for any April, and a 5.7% increase from last year.

To put those numbers in perspective, the sales rate in April was 17% below the long-run average of 4.96 million, and 26% below the level in March 2022 when the Federal Reserve begꦰan its♉ campaign of anti-inflation interest rate hikes, Jay Hawkins, an economist at BMO Capital Markets, said in a commentary.  

Mortgage Rates Keep Many Locked In Their Home

Those figures highlight how increasing mortgage rates have put the brakes on home sales over the past two years. In early 2022, mortgage rates were still near the record lows they hit during the pandemic, which m𝔍ade homebuying more affordable and fueled frenzie🐼d demand for houses. 

That began to change in March of that year when the Federal Reserve began raising its benchmark interest rate to combat inflation, pushing up mortgage rates. The average rate offered for a 30-year mortgage was 7.02% last week according to Freddie Mac, and has been hovering around 7% all year.

High mortgage rates have made monthly mortgage payments all but unaffordable for many buyers, stifling demand. It's also discouraging would-be sellers from moving, which would mean giving up low mortgage rates they secured whe☂n borrowing was cheaper. 

That “lock-in” effect has helped keep prices rising despite falling sales, an unusual combination historically.

However, More Homes Are Going on the Market

There🍒 was one bright spot for homebuyers in the report: the lock-in effect appeared to diminish somewhat, with the number of homes for sale rising to 1.21 million from 1.1 million in March, the fo🗹urth increase in as many months and the most since October 2021.

“We are beginning to see more choices for consumers out in the marketplace," said Lawrence Yun, chief economist at the association, in a conference call with reporters.

The uptick in inventory could be due to a surge in homebuilding in recent years trickling do🐷wn to the existing home market, and the lock-in effect diminishing somewhat as homeowners resign themselves to the new financial realities.

"Maybe people are accepting that we may be in this new normal high interest rate environment," Yun said.

The number of homes for sale still paled in comparison to pre-pandemic times: there were 1.8 million for sale in April 2019, before the pandemic hit, for example.