Existing Homes Sales Post First 2014 Increase
There were stirrings of a spring market in April as both existing home sales and the inventory of available homes increased. The National Association of Realtors® (NAR) said that home price growth also slowed, an encouraging sign of continued affordability.
Existing home sales which include completed transactions on single family and town homes, condominiums, and coops, rose 1.3 percent in April to a seasonally adjusted annual rate of 4.65 million. It was the first increase thus far in 2014 and sales remain 6.8 percent below the 4.99 million unit rate in April 2013. March sales were at a rate of 4.59 million.
Sales of single-family homes improved by 0.5 percent to a seasonally adjusted annual rate of 4.06 million in April from 4.04 million in March, but are 7.7 percent below the 4.40 million pace a year ago. Existing condominium and co-op sales rose 7.3 percent to an annual rate of 590,000 units in April from 550,000 units in March, but are unchanged from April 2013.
Lawrence Yun, NAR chief economist, said the improvement was expected. "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," he said. "Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year."
The inventory of existing homes jumped 16.8 percent to 2.29 million, a 5.9 month supply compared to 5.1 months at the end of March. The unsold inventory is 6.5 percent higher than a year ago, when there was a 5.2-month supply.
"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.
Home values continue to appreciate but the pace is slowing. The median existing-home price for all housing types in April was $201,700, which is 5.2 percent higher than in April 2013 while median prices increased by 8.6 percent on an annual basis during the first quarter. The median existing single-family home price was $201,100, in April representing a 4.7 percent annual increase and the median condo price rose 8.3 percent to $205,500.
As NAR reported earlier this month, the market share of all-cash purchases has risen recently despite a downtrend in distressed home sales and investor activity. All-cash sales comprised 32 percent of transactions in April, compared with 33 percent in March and 32 percent in April 2013. Individual investors, who account for many cash sales, purchased 18 percent of homes in April, up from 17 percent in March; they were 19 percent in April 2013. Seven out of 10 investors paid cash in April. First-time buyers continue to represent less than one-third of all buyers at 29 percent in April, the same as a year earlier but one percentage point below the share in March.
Ten percent of sales in April were foreclosures and 5 percent were short sales. The combined market share was down from 18 percent one year earlier. Foreclosures sold for an average discount of 16 percent below market value in April, while short sales were discounted 10 percent.
NAR President Steve Brown said there was some heating of the market last month. "The typical time on market shrunk in April, with four out of 10 homes selling in less than a month," he said. "Homes that show well and are properly priced tend to sell the fastest. More housing inventory gives buyers better choices, and takes the pressure off of the buying process, which is a welcome sign, especially for first-time buyers."
The median marketing time for all homes was 48 days compared to 55 days in March and 43 days one year earlier. Short sales took a median of 96 days to close and foreclosure 56 days while non-distressed properties sold in 45 days. This was the fourth straight month that marketing time improved. NAR said this reflected the prolonged lag in inventory compared to demand.
Sales were mixed on a regional basis with the West making the best showing with an increase of 4.9 percent to an annual rate of 1.08 million units. This is still 10 percent below the pace in April 2013. The median price of a home in the West was $291,200, 9.7 percent above the price in April 2013.
Sales rose to a lesser extent in the South, increasing 1.0 percent to an annual rate of 1.94 million units, 3.5 percent lower than a year earlier. The median price was $173,200, up 3.2 percent from a year ago.
Sales were unchanged in the Northeast at an annual rate of 600,000. This was 6.3 percent below the level 12 months earlier. The median price in the Northeast declined 0.4 percent to $244,000.
Existing-home sales in the Midwest slipped 1.0 percent in April to a pace of 1.03 million, and are 9.6 percent below a year ago. The median price was $157,200, which is 5.8 percent above April 2013.