April Existing-Home Sales Up but Constrained
Existing-home sales rose in April but remain below underlying demand because of limited inventory and tight credit, according to the National Association of Realtors. All regions are showing strong price gains from a year ago.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.6 percent to a seasonally adjusted annual rate of 4.97 million in April from an upwardly revised 4.94 million in March. Resale activity is 9.7 percent above the 4.53 million-unit level in April 2012.
Lawrence Yun, NAR chief economist, said the market is solidly recovering. “The robust housing market recovery is occurring in spite of tight access to credit and limited inventory. Without these frictions, existing-home sales easily would be well above the 5-million unit pace,” he said. “Buyer traffic is 31 percent stronger than a year ago, but sales are running only about 10 percent higher. It’s become quite clear that the only way to tame price growth to a manageable, healthy pace is higher levels of new home construction.”
Existing-home sales are at the highest pace since November 2009 when the market spiked to 5.44 million in response to the home buyer tax credit. Total sales have been above year-ago levels for 22 consecutive months, while prices show 14 consecutive months of year-over-year price increases.
Total housing inventory at the end of April rose 11.9 percent, a seasonal increase to 2.16 million existing homes available for sale, which represents a 5.2-month supply at the current sales pace, compared with 4.7 months in March. Listed inventory is 13.6 percent below a year ago, when there was a 6.6-month supply, with current availability tighter in the lower price ranges.
The national median existing-home price for all housing types was $192,800 in April, up 11.0 percent from April 2012. The last time there were 14 consecutive months of year-over-year price increases was from April 2005 to May 2006.
Distressed homes – foreclosures and short sales – accounted for 18 percent of April sales, down from 21 percent in March and 28 percent in April 2012. Eleven percent of April sales were foreclosures, and 7 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in April, while short sales were discounted 14 percent.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 3.45 percent in April from 3.57 percent in March; it was 3.91 percent in April 2012.
The median time on market for all homes was 43 days in April, down sharply from 62 days in March, and is 48 percent faster than the 83 days on market in April 2012.
NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said market conditions have flipped in the past year. “With homes selling in half the time it took to sell a year ago, buyers must be both decisive and prudent,” he said. “Advice with contract terms and negotiations is where the expertise of a Realtor shines for both buyers and sellers.”
Short sales were on the market for a median of 73 days, while foreclosures typically sold in 43 days and non-distressed homes took 44 days. Forty-four percent of all homes sold in April were on the market for less than a month, while only 8 percent were on the market for a year or longer.
First-time buyers accounted for 29 percent of purchases in April, compared with 30 percent in March and 35 percent in April 2012.
All-cash sales were at 32 percent of transactions in April, up from 30 percent in March; they were 29 percent in April 2012. Individual investors, who account for most cash sales, purchased 19 percent of homes in April, unchanged from March; they were 20 percent in April 2012.
Single-family home sales rose 1.2 percent to a seasonally adjusted annual rate of 4.38 million in April from 4.33 million in March, and are 9.0 percent above the 4.02 million-unit level in April 2012. The median existing single-family home price was $193,300 in April, which is 11.0 percent above a year ago.
Existing condominium and co-op sales declined 3.3 percent to an annualized rate of 590,000 units in April from 610,000 in March, but are 15.7 percent above the 510,000-unit pace a year ago. The median existing condo price was $189,500 in April, up 11.3 percent from April 2012.
Regionally, existing-home sales in the Northeast rose 1.6 percent to an annual rate of 640,000 in April and are 4.9 percent above April 2012. The median price in the Northeast was $245,100, up 5.1 percent from a year ago.
Existing-home sales in the Midwest fell 3.4 percent in April to a pace of 1.12 million but are 9.8 percent above a year ago. The median price in the Midwest was $149,300, up 6.7 percent from April 2012.
In the South, existing-home sales rose 2.0 percent to an annual level of 2.01 million in April and are 14.9 percent above April 2012. The median price in the South was $168,700, which is 10.6 percent above a year ago.
Existing-home sales in the West increased 1.7 percent to a pace of 1.20 million in April and are 4.3 percent above a year ago. Given limited choices and multiple bidding, the median price in the West was $263,600, up 17.5 percent from April 2012.