Low Inventories Hamper April Existing Home Sales

The National Association of Realtors said “stubbornly low” supply levels held down existinghome sales in April and pushed the median number of days a home was on the market to a new low of 29 days.

NAR said total existing home salesfell by 2.3 percent to a seasonally adjusted annual rate of 5.57 million in April from a downwardly revised 5.70 million in March. Despite last month’s decline, sales remained 1.6 percent above a year ago and at the fourth-highest pace over the past year.

Single-family home sales decreased by 2.4 percent to 4.95 million in April from 5.07 million in March, but were 1.6 percent above the 4.87 million pace a year ago. The median existing single-family home price rose to $246,100 in April, up by 6.1 percent from a year ago. Existing condominium and co-op sales declined by 1.6 percent to 620,000 units in April, but were 1.6 percent higher than a year ago. The median existing condo price rose to $234,600 in April, up by 5.6 percent from a year ago.

Regionally, only the Midwest saw an increase. Sales there increased by 3.8 percent to an annual rate of 1.36 million in April, but were 0.7 percent below a year ago. The median price in the Midwest rose to $194,500, up 7.8 percent from a year ago.

Sales in the South in fell by 5.0 percent to 2.30 million, but were 3.6 percent above April 2016. The median price in the South rose to $217,700, up 7.9 percent from a year ago. Sales in the West declined by 3.3 percent to 1.18 million in April, but were 3.5 percent above a year ago. The median price in the West rose to $358,600, up 6.8 percent from a year ago. Sales dipped by 2.7 percent to 730,000 and by 2.7 percent from a year ago. The median price in the Northeast rose to $267,700, 1.6 percent higher than a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., noted sales through the first four months of 2017 were running 4.1 percent ahead of last year but are being held back by a lack of homes for sale. “The earlier than usual start to spring home buying left fewer homes for April buyers,” he said.

Despite this, Vitner said the report does little to dispel the notion that the housing market is building strong momentum. “Homes are selling quickly,” he said. “The average home was on the market for a record-low 29 days, which is down from 39 days last year.”

Ralph McLaughlin, chief economist with Trulia, San Francisco, agreed. “Though April’s existing home sales numbers fell back from March, the long-run story looks good,” he said. “Sales are now about 95 percent of their pre-recession peak, but this is down from 97 percent in March. Homebuyers are certainly pulling their weight when it comes to pushing home sales back to normal. Homebuyers have been stymied by low inventory over the past few years, and the trend continued in April. The number of homes on the market fell yet again last month, dropping another 8.7 percent from last year. This home buying season has not brought the relief they so desperately need.”

NAR Chief Economist Lawrence Yun said demand is “easily outstripping supply in most of the country and it’s stymieing many prospective buyers from finding a home to purchase.”

NAR reported the median existing-home price for all housing types in April rose to $244,800, up 6.0 percent from a year ago ($230,900). April’s price increase marked the 62nd straight month of year-over-year gains. Total housing inventory at the end of April climbed 7.2 percent to 1.93 million existing homes available for sale, but was still 9.0 percent lower than a year ago (2.12 million) and has fallen year-over-year for 23 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, down from 4.6 months a year ago.

“Realtors continue to voice the frustration their clients are experiencing because of the insufficient number of homes for sale,” Yun said. “Homes in the lower- and mid-market price range are hard to find in most markets, and when one is listed for sale, interest is immediate and multiple offers are nudging the eventual sales prices higher.”

Properties typically stayed on the market for 29 days in April, down from 34 days in March and 39 days a year ago and surpasses last May (32 days) as the shortest timeframe since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 88 days in April, while foreclosures sold in 46 days and non-distressed homes took 28 days. Fifty-two percent of homes sold in April were on the market for less than a month (a new high).

NAR said all-cash sales represented 21 percent of transactions in April, down from 23 percent in March and 24 percent a year ago. Individual investors purchased 15 percent of homes in April, unchanged from March but up from 13 percent a year ago. Fifty-seven percent of investors paid in cash in April.

The report said distressed sales represented 5 percent of sales in April, down from 6 percent in March and 7 percent a year ago. Three percent of April sales were foreclosures; 2 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in April (16 percent in March), while short sales were discounted 12 percent (14 percent in March).