April Existing Home Sales Show Modest Improvement Behind Gaining Inventory

image_pdfimage_print

NAR LOgoWASHINGTON – Existing-home sales increased for the first time this year in April, while inventory meaningfully increased and home price growth moderated, according to the National Association of Realtors. Monthly sales gains in the West and South offset a modest decline in the Midwest while the Northeast was unchanged.

Total existing home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.3 percent to a seasonally adjusted annual rate of 4.65 million in April from 4.59 million in March, but are 6.8% below the 4.99 million-unit level in April

Lawrence Yun, NAR chief economist, expected the improvement. “Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point,” he said. “Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”

Total housing inventory2 at the end of April jumped 16.8% to 2.29 million existing homes available for sale, which represents a 5.9-month supply at the current sales pace, up from 5.1 months in March. Unsold inventory is 6.5% higher than a year ago, when there was a 5.2-month supply.

“We’ll continue to see a balancing act between housing inventory and price growth, which remains stronger than normal simply because there have not been enough sellers in many areas. More inventory and increased new-home construction will help to foster healthy market conditions,” Yun added.

The median existing-home pricefor all housing types in April was $201,700, which is 5.2% above April 2013; in the first quarter the median price was 8.6% above a year earlier. “Current price data suggests a trend of slower growth, which bodes well for preserving favorable affordability conditions in much of the country,” Yun said.

Earlier this month, NAR reported the market share of all cash purchases has risen despite a downtrend in distressed home sales and investor activity. Distressed homes – foreclosures and short sales – accounted for 15% of April sales, down from 18% in April 2013.

Ten percent of April sales were foreclosures, and 5% were short sales. Foreclosures sold for an average discount of 16% below market value in April, while short sales were discounted 10%.

NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, said there was some heating of the market last month. “The typical time on market shrunk in April, with four out of 10 homes selling in less than a month,” he said.  “Homes that show well and are properly priced tend to sell the fastest. More housing inventory gives buyers better choices, and takes the pressure off of the buying process, which is a welcome sign, especially for first-time buyers.”

Properties sold faster for the fourth straight month in April, reflecting the prolonged lag in inventory relative to demand. The median time on market for all homes was 48 days in April, down from 55 days in March; it was 43 days on market in April 2013.

Short sales were on the market for a median of 96 days in April, while foreclosures typically sold in 56 days and non-distressed homes took 45 days. Forty-one percent of homes sold in April were on the market for less than a month.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.34% in April, unchanged from March but up from 3.45% in April 2013.

First-time buyers continue to represent fewer than one-third of all buyers at 29% in April, down from 30% in March; they were 29% in April 2013.

All-cash sales comprised 32% of transactions in April, compared with 33% in March and 32% in April 2013. Individual investors, who account for many cash sales, purchased 18% of homes in April, up from 17% in March; they were 19% in April 2013. Seven out of 10 investors paid cash in April.

Single-family home sales inched up 0.5% to a seasonally adjusted annual rate of 4.06 million in April from 4.04 million in March, but are 7.7% below the 4.40 million pace a year ago. The median existing single-family home price was $201,100 in April, up 4.7% from April 2013.

Existing condominium and co-op sales rose 7.3% to an annual rate of 590,000 units in April from 550,000 units in March, but are unchanged from April 2013. The median existing condo price was $205,500 in April, which is 8.3% higher than a year ago.

Regionally, existing-home sales in the Northeast were unchanged at an annual rate of 600,000 in April, but are 6.3% below April 2013. The median price in the Northeast was $244,000, down 0.4% from a year ago.

Existing-home sales in the Midwest slipped 1.0% in April to a pace of 1.03 million, and are 9.6% below a year ago. The median price in the Midwest was $157,200, which is 5.8% above April 2013.

In the South, existing-home sales increased 1.0% to an annual level of 1.94 million in April, but are 3.5% below April 2013. The median price in the South was $173,200, up 3.2% from a year ago.

Existing-home sales in the West rose 4.9% to a pace of 1.08 million in April, but are 10.0% below a year ago. The median price in the West was $291,200, which is 9.7% above April 2013.