Existing Home Sales Were Down 2.6 Percent In April

On Thursday the Census Bureau and the Department of Housing and Urban Development released figures for new home sales in April that showed a big increase in sales and a drop in both median and average home sale prices. Media coverage has speculated that the both outcomes were a result of price cuts by builders in an attempt to get product moving and inventories reduced.

On Friday the National Association of Realtors released its report on the April sales of existing homes. The data showed a 2.6 percent drop in the seasonally adjusted sales rate of single-family homes, townhouses, condominiums, and co-ops from upwardly-revised March levels.

Total existing home sales were at a seasonally adjusted annual rate of 5.99 million units in April compared to 6.5 million in March. The sales pace is 10.7 percent lower than the 6.71 million units sold in April 2006.

Lawrence Yun is NAR's new senior economist, replacing long-time NAR officer David Lereah who left NAR to head an unspecified major project at MOVE.com, the company that owns www.Realtor.com. Speaking about the report Yun said that he isn't surprised. "We've been anticipating slower home sales because many subprime loan products are no longer available. In addition, increased scrutiny by lenders is stopping risky mortgage origination, which is good for both consumers and the lending community. Fortunately, a wide availability of conventional mortgage products and the 4.5 million jobs created over the past 24 months will help to stabilize the market going forward."

NAR President Pat V. Combs said historically low mortgage interest rates continue to support the housing market. "Long-term financing remains favorable, but interest rates are rising," she said. "Although some buyers have a wait-and-see attitude regarding home prices, they should consider that rising interest rates later this year could offset a lower sales price when you get down to the monthly payments.

The inventory of existing houses on the market is much higher than that for new homes. There is a 6.0 month supply of new homes available but at the present absorption rate it would take 8.4 months to eliminate the current backlog of existing homes. Last month the inventory was estimated at a 7.4 months supply.

NAR ignores month-to-month changes in sales prices, preferring to focus on year-over-year figures because of the seasonality in buying patterns. "Month-to-month comparisons do not compensate for seasonal changes," the report states, "especially for the timing of family buying patterns. Changes in the geographic composition of sales can distort median price data."

According to NAR the national median existing-home price for all housing types was $220,900 in April, down 0.8 percent from April 2006 when the median was $222,600. The report noted, however, that there is a downward skew in the current national comparison because sales have shifted away from many high-cost areas during the last year.

Sales slipped in every region and prices in all but the Midwest.

Sales in the Midwest were down 0.7 percent in April to a level of 1.38 million, and are 11.5 percent below a year ago. The median price in the Midwest was $166,600, 1.9 percent higher than in April 2006.

The South dropped 1.2 percent to an annual rate of 2.38 million units in April, 8.8 percent below a year earlier. The median price was $181,100, down 0.3 percent from a year ago.

Sales in the West declined 1.7 percent to 1.19 million, 15.6 percent lower than a year ago. The median price in the West was $338,200, which is 2.1 percent lower than April 2006.

Existing-home sales in the Northeast fell 8.8 percent to a level of 1.04 million in April, and are 8.8 percent lower than April 2006. The median existing-home price in the Northeast was $283,600, which is 0.6 percent below a year ago.

Figures for single family homes did not differ substantially from the data for all homes. If you wish to view the entire report you can do so at www.realator.org.