April Existing Home Sales Stumble

Existing home sales fell in April for the first time in three months, the National Association of Realtors reported yesterday.

The report said total existing-home sales fell by 2.5 percent to a seasonally adjusted annual rate of 5.46 million in April from 5.60 million in March. Sales fell by 1.4 percent from a year ago and have fallen year-over-year for two straight months.

NAR said single-family home sales fell by 3.0 percent to a seasonally adjusted annual rate of 4.84 million in April from 4.99 million in March, and by 1.6 percent from a year ago. The median existing single-family home price rose $259,900 in April, up 5.5 percent from a year ago. Existing condominium and co-op sales increased by 1.6 percent to 620,000 units in April, unchanged from a year ago. The median existing condo price rose to $242,500 in April, up by 3.4 percent from a year ago.

The median existing-home price for all housing types in April rose to $257,900, up 5.3 percent from a year ago ($245,000), marking the 74th straight month of year-over-year gains. Total housing inventory at the end of April increased by 9.8 percent to 1.80 million existing homes available for sale, but was still 6.3 percent lower than a year ago (1.92 million) and has fallen year-over-year for 35 consecutive months. Unsold inventory is at a 4.0-month supply at the current sales pace (4.2 months a year ago).

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the monthly decline is all about lack of inventory.

“The ongoing shortage of homes available for purchase continues to weigh on sales,” Vitner said. “While sales fell, demand is not the problem. Homes are selling quickly and prices continue to rise. The typical home remained on the market for just 26 days, down from 29 days a year ago.”

Vitner noted stronger job and income growth has bolstered buyer confidence and a rising share of households say they plan to purchase homes in coming months. “Higher prices and rising interest rates will test buyers’ resolve,” he said.

Regionally, sales in the Northeast fell 4.4 percent to an annual rate of 650,000 and fell by 11.0 percent from a year ago. The median price in the Northeast was $275,200, 2.8 percent higher than a year ago. In the Midwest, sales were unchanged from March at 1.29 million and 3.0 percent below a year ago. The median price in the Midwest rose to $202,100, up 4.6 percent from a year ago.

Sales in the South decreased by nearly 3 percent to 2.33 million in April, but were 2.2 percent higher than a year ago. The median price in the South rose to $227,600, up 3.9 percent from a year ago. Sales in the West declined by 3.3 percent to a 1.19 million in April and by 0.8 percent fron a year ago. The median price in the West rose to $382,100, up 6.2 percent from a year ago.

“The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home,” said NAR Chief Economist Lawrence Yun. “Realtors say the healthy economy and job market are keeping buyers in the market for now even as they face rising mortgage rates. However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford.”

The report said properties typically stayed on the market for 26 days in April, down from 30 days in February and 29 days a year ago. Fifty-seven percent of homes sold in April were on the market for less than a month.

First-time buyers represented 33 percent of sales in April (highest since last July), up from 30 percent last month but down from 34 percent a year ago. All-cash sales represented 21 percent of transactions in April, up from 20 percent in March and unchanged from a year ago. Individual investors purchased 15 percent of homes in April (unchanged from last month and a year ago).

Distressed sales represented 3.5 percent of sales in April (lowest since NAR began tracking in October 2008), down from 4 percent last month and 5 percent a year ago. Three percent of April sales were foreclosures and 0.5 percent were short sales.