By Shaina Mishkin

Home prices could drop by the end of the year, but relatively few distressed sales make a price crash an "impossibility," the National Association of Realtors' chief economist said Thursday.

Prices kept inching up in April even as sales unexpectedly fell, the trade group said. Previously owned homes were sold in April at a seasonally adjusted annual rate of 4 million. That's down 0.5% from the month prior and below consensus estimates that called for a rise to 4.1 million.

The sales decline came even as the number of homes for sale rose to 1.45 million units, up 9% from the month prior and about 21% higher than one year ago.

Prices continued to rise, though at a slower pace than any month since mid-2023. The median previously owned home in April sold for $414,000, up 1.8% from last year .

"At the macro level, we are still in a mild seller's market," National Association of Realtors chief economist Lawrence Yun said in a statement. "But with the highest inventory levels in nearly five years, consumers are in a better situation to negotiate for better deals."

Housing dynamics are shifting out of sellers' favor. Gains in inventory at a time when demand remains weak could stunt prices or cause declines, Barron's reported recently.

"Even with increasing inventory, we are not getting a pickup in home sales," Yun said, noting that he would likely downgrade his expectations for home sales, which recently called for a 6% increase in existing-home sales this year, slightly. He expects home prices to keep rising nationally this year, with modest declines possible in some markets.

Some forecasters foresee broader drops: Redfin on Thursday said it expects home prices nationally to fall 1% from year-ago levels in the fourth quarter. Zillow recently said it expects home values to drop this year.

The reasoning for both Redfin and Zillow's forecasts are similar: the number of homes for sale has increased, while buyers remain hesitant. Purchase demand from would-be buyers likely "will continue to slip, especially with all these economic jitters," says Chen Zhao, Redfin's head of economics research. "Even if we're not really headed for an outright recession, the economy is certainly going to slow -- and that's going to weigh on demand."

Buyers and sellers might be in a stalemate -- but a low level of distressed sales means prices won't crater, the Realtor group's Yun said on a conference call. Distressed sales last month were 2% of all transactions, lower than the 3% in March and equal to April one year prior. That low level is "the key indicator that a home price crash is an impossibility," Yun said.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

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May 22, 2025 11:41 ET (15:41 GMT)

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