Existing-Home Sales Rise, But Market Remains Constrained

Although existing-home sales rose in April, they remain below underlying demand because of limited inventory and tight credit, according to the National Association of Realtors (NAR). On the positive side, 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% 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% above the 4.53-million-unit level in April 2012.

According to Lawrence Yun, chief economist at NAR, the market is solidly recovering. ‘The robust housing market recovery is occurring in spite of tight access to credit and limited inventory,’ he says. ‘Without these frictions, existing-home sales easily would be well above the 5-million-unit pace. 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 homebuyer 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, according to NAR.

Total housing inventory at the end of April rose 11.9% 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% 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 reached $192,800 in April, up 11% from April 2012. The last time there were 14 consecutive months of year-over-year price increases was from April 2005 to May 2006, NAR notes.

Distressed homes – foreclosures and short sales – accounted for 18% of April sales, down from 21% in March and 28% in April 2012. Eleven percent of April sales were foreclosures, and 7% were short sales. Foreclosures sold for an average discount of 16% below market value in April, while short sales were discounted 14%.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 3.45% in April from 3.57% in March; it was 3.91% in April 2012.

The median time on market for all homes fell to 46 days in April, down sharply from 62 days in March, and is 48 percent faster than the 83 days on market in April 2012.

Short sales stayed 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% 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 constituted 32% of transactions in April, up from 30% in March and 29% in April 2012. Individual investors, who account for most cash sales, purchased 19% of homes in April, a statistic that remained unchanged from March.

Single-family home sales rose 1.2% to a seasonally adjusted annual rate of 4.38 million in April from 4.33 million in March, and are 9% above the 4.02 million-unit level in April 2012.

The median existing single-family home price was $193,300 in April – 11% above a year ago. Existing condominium and co-op sales declined 3.3% to an annualized rate of 590,000 units in April from 610,000 in March, but they are 15.7% 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.


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