REAL ESTATE NEWS

Housing Market Comes Back To Life In April As Price Gains Slow

Forbes Staff

Erin Carlyle

Existing-home sales ticked up by 1.3% in April, rising for the first time this year, the National Association of Realtors said Thursday.

Total existing-home sales (closings of previously-owned single-family homes, townhouses, condos and co-ops) rose to an annual rate of 4.65 million (seasonally adjusted), up from 4.59 million (seasonally adjusted) in March. Although the figures show an increase for the month, the sales pace is still 6.8% below its 4.99 million level one year earlier.

Still, the numbers are good news after sales of previously-owned homes slowed this winter, thanks to a combination of low inventory, rising prices and mortgage rates, and atrocious weather. Lawrence Yun, NAR’s chief economist, noted that the sales pace gains were to be expected this month. “Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point. Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”

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Year-over-year data indicates that price gains are slowing. The median existing-home price for all home types in April was $201,700, 5.2% higher than one year earlier. By contrast, during the first quarter of 2014 the median price for all home types was well above that, at 8.6% higher than one year earlier.

An increase an inventory has helped eased pressure on pricing. Total housing stock jumped 16.8% at the end of April, to 2.29 million existing homes available for sale. That level represents a 5.9-month supply at the current sales pace (a six-month supply is considered healthy), up from a 5.1-month supply in March.

“We’ll continue to see a balancing act between housing inventory and price growth, which remains stronger than normal simply because there have not been enough sellers in many areas. More inventory and increased new-home construction will help to foster healthy market conditions,” Yun said.

All-cash transactions were high, comprising 32% of sales in April, the same level as one year earlier. Foreclosures and short sales accounted for 15% of April sales, down from 18% one year before. Ten percent of distressed sales were foreclosures, 5% short sales.

Mortgage rates are significantly higher than a year earlier. The national average rate for a mortgage (30-year fixed-rate) was 4.34% in April, according to Freddie Mac. That’s the same rate as in March but well above April 2013′s 3.45% average rate. First-time buyers continue to represent fewer than one-third of all buyers, at 29% in April, the same level as one year earlier and a bit down from March’s 30% level.

For previously-owned single-family homes alone, the median price was $201,100 in April, 4.7% up from April 2013. The median existing condo price was $205,500 in April, 8.3% up from one year ago.

Prices, of course, varied by region. The median price in the Northeast was $244,000, down 0.4% from a year ago; in the Midwest it was $157,200, 5.8% above April 2013; in the South $173,200, up 3.2%; and in the West $291,200, 9.7% above April 2013.

The sales rate of existing homes in the Northeast stayed flat at an annual (seasonally adjusted) rate of 600,000 in April, 6.3% down from April 2013. Existing-home sales in the Midwest fell 1% in April to a pace of 1.03 million, 9.6% below a year ago. Sales in the South increased 1% to an annual level of 1.94 million in April, 3.5% below April 2013. In the West sales rose 4.9% to a pace of 1.08 million in April, 10% percent below a year ago.