Sales Increase, But Inventory Still Problematic

ng-home sales rose in April, with strong buyer activity in lower price ranges, according to the National Association of Realtors. Existing-home sales increased 2.9% to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March but fell 3.5% year-over-year. Although first-time buyers continue to influence the market, there also is a seasonal rise of repeat buyers, according to NAR's chief economist, Lawrence Yun. "Most of the sales are taking place in lower price ranges, and activity is beginning to pick up in the mid-price ranges, but high-end home sales remain sluggish," he says. "The Federal Reserve needs to help restore liquidity for the jumbo mortgage market by buying these loans under the [Term Asset-Backed Securities Loan Facilitiy] program." With more foreclosure properties expected to add to an already bloated inventory, Yun says it is critical that distressed homes be quickly cleared from the market. "Fortunately, home buyers are being attracted to deeply discounted prices and are bidding up many foreclosed listings, particularly in California, Nevada, and Florida. This will set the stage for healthy market conditions going forward," he says. An NAR practitioner survey in April showed that first-time buyers declined to 40% of transactions, implying more repeat buyers are entering the traditional spring home-buying season, the group says. It also showed the number of buyers looking at homes has increased 14 percentage points from a year ago. "This is consistent with our forecast for home sales in the latter part of the year to be 10 percent to 20 percent higher than the second half of 2008," Yun says. The national median existing-home price for all housing types was $170,200 in April, which is 15.4% below the 2008 figure. Distressed properties, which accounted for almost half of all sales in April, at 45%, continue to downwardly distort the median price. Total housing inventory at the end of April rose 8.8% to 3.97 million existing homes available for sale, which represents a 10.2-month supply at the current sales pace. March's inventory represented a 9.6-month supply. Sellers normally enter or return to the market in the spring, Yun notes, but even so, "inventory over the past few months has remained consistently lower in comparison with a year earlier," he says. Single-family home sales rose 2.5%, and condominium and co-op sales increased 6.4%. Broken down by region, the Northeast had the most existing-home sales, jumping 11.6%. The West had the second-largest regional gain, at 3.5%, but its median home price dropped the most year-over-year. Down 21.8% from April 2008, the West was followed distantly by the South's 12.8% median home price dip. SOURCE: National Association of R


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