Existing-Home Sales Hit Lowest April Level Since 2009

Existing homes had their worst April since 2009

New home sales jumped to their highest level since February 2022.

Why? The initial headline looks terrible, so what’s going on?

What Happened

The U.S. housing market split in April. Existing-home sales fell 0.5% MoM to a seasonally adjusted annual rate of 4 million, the lowest April reading since 2009. On the other hand, new-home sales surged nearly 11% to 743,000, their highest level since early 2022. Despite a 21% YoY increase in listings, the resale market remains stagnant. Builders are capturing more market share by responding actively to affordability constraints.

Why the Resale Market is Stuck

Homeowners are not responding to market conditions in the same way builders are. Most are locked into ultra-low mortgage rates below 4%, so they feel little urgency to sell. At the same time, they’re unwilling to cut prices or offer concessions to compete with more flexible builders. As a result, resale inventory has climbed to a 5Y high of 1.45 million homes, but sales activity remains sluggish.

The median existing-home price rose 1.8% YoY to a record $414,000 in April, even as mortgage rates hover near 7%. Affordability remains a major barrier, which pushes many buyers toward new construction, where builders are offering rate buydowns and closing cost incentives. Rising economic uncertainty, market volatility, and job security concerns have also weakened buyer sentiment. These pressures helped drive a 7% cancellation rate in April, the highest since early 2024.

How Builders Are Generating Sales

Homebuilders like Toll Brothers are adjusting quickly. The median new-home price declined 2% year-over-year to $407,200, falling below the resale median. Builders are offering rate buydowns, covering closing costs, and prioritizing quick-delivery spec homes. In the South and Midwest, where demand is strongest, builders are targeting price points under $400,000. Toll Brothers, which caters to a more affluent customer base, reported that 24% of buyers paid all cash, and the average loan-to-value ratio stayed at 70%. Their cancellation rate was just 2.8%, and their average buyer spent $200,000 on design upgrades, which boosted margins and signaled buyer commitment.

Toll Brothers: Reading the Market in Real Time

Toll’s Q2 results reveal that builders are quickly adapting to a cooling housing market by prioritizing margin over sales pace, increasing incentives only modestly (to 7% of average sales price), and selectively slowing spec starts to avoid overbuilding. They are also being disciplined with land acquisition and favoring optioned lots to preserve flexibility. By focusing on well-located communities and financially secure buyers, Toll was able to beat guidance while maintaining 27.5% gross margins. Importantly, they are timing spec completions to align with seasonal demand, offering move-in-ready homes during the peak summer window when families aim to relocate before the school year begins.

The Outlook for Residential Real Estate

This divergence is structural and likely to persist because builders are nimble and are adjusting pricing, incentives, and supply to meet current demand. Homeowners, on the other hand, are slower to respond and are constrained by financial and emotional ties to their homes. Unless resale prices decline or mortgage rates fall meaningfully, builders will continue to lead on volume. Tariff uncertainty, high rates, and shaky consumer confidence will keep pressure on the resale side in the near term.

Investor Takeaway

Builders like Toll demonstrate that pricing power follows flexibility. Those who can control inventory, offer timely incentives, and target financially resilient buyers are best positioned to outperform. 

Existing-home sellers, often anchored by past conditions, may remain sidelined unless forced to reprice. The housing market is cooling and is moving in one direction: toward those who can adapt. 

Still, residential housing markets vary widely across the country, and some high-demand metros may remain resilient thanks to strong demographics, job growth, and economic opportunity.