Existing Home Sales Decline Slightly; Inventory Issues Persist
Existing homes declined in April, falling back by 2.3 percent in April when compared to March 2017 levels. The National Association of Realtors® (NAR) said the month's transactions, which include those for single-family houses, townhouses, condos and cooperative apartments, were at a seasonally adjusted annual rate of 5.57 million. March sales were revised down from 5.71 to 5.70 million. Despite the decline, April's numbers were still 1.6 percent higher than the previous April and were at the fourth highest rate in the past year.
Analysts polled by Econoday were expecting that sales would be lower in the wake of a 4.2 percent month-over-month gain in March. The consensus was for sales of 5.65 million. New homes sales, which were released on Monday, posted an 11.4 percent month-over-month decline.
Single-family home sales decreased 2.4 percent to a seasonally adjusted annual rate of 4.95 million in April from 5.07 million in March, but are still 1.6 percent above the 4.87 million pace a year earlier. Existing condominium and co-op sales were down 1.6 percent to a seasonally adjusted annual rate of 620,000 units, remaining 1.6 percent higher than in April 2017.
NAR said sales were held down by a "stubbornly low supply" of homes for sale. This also helped push the median number of days a home was on the market to a new low of 29 days.
Lawrence Yun, NAR chief economist, says every major region except for the Midwest saw lower sales in April. "Last month's dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2 percent, and new and existing inventory is not keeping up with the fast pace homes are coming off the market," he said. "Demand is easily outstripping supply in most of the country and it's stymieing many prospective buyers from finding a home to purchase."
The median existing-home price for all housing types in April was $244,800, up 6.0 percent from the April 2016 median of $230,900. This marks the 62nd straight month of year-over-year gains although April's was the smallest annual increase since December. Over the first quarter of the year NAR has reported price gains averaging 7.2 percent.
The median existing single-family home price was $246,100 and the median condo price was $234,600. These are annual increases of 6.1 percent and 5.6 percent respectively.
The inventory of available existing homes increased by 7.2 percent at the end of April to 1.93 million homes, an estimated 4.2 month supply. However, the inventory 9.0 percent smaller than it was in April 2016, 2.12 million available homes, extending the run of year-over-year declines to 23 straight months.
"Realtors continue to voice the frustration their clients are experiencing because of the insufficient number of homes for sale," added Yun. "Homes in the lower- and mid-market price range are hard to find in most markets, and when one is listed for sale, interest is immediate and multiple offers are nudging the eventual sales prices higher."
The typical 29 day marketing period in April is five days shorter than in March and 10 days less than in April 2016. It surpasses May 2016, when the typical period was 32 days, as the shortest since NAR began tracking that data in May 2011. Short sales took a median of 88 days to sell, foreclosures 46 days, and non-distressed homes 28 days. Fifty-two percent of homes sold in April were on the market for less than a month, a new high.
Yun commented that mortgage rates have been stuck in a holding pattern in recent months, which is a relief for spring homebuyers. "With price growth showing little sign of slowing, prospective first-time buyers will be the most sensitive to any sudden uptick in rates in the months ahead," he said.
The share of first-time buyers rose to 34 percent from 32 percent both in March and a year ago, and was the highest portion since last September. Individual investors accounted for 15 percent of sales compared to 13 percent a year earlier, and 57 percent of their purchases were all cash. Overall cash sales accounted for 21 percent of all transactions in April, down from 23 percent in March.
Three percent of April sales were of foreclosed properties and 2 percent were short sales. Distressed sales over all were lower than the 6 percent share in March and 7 percent a year ago. Foreclosures sold for an average discount of 18 percent below market value while short sales were discounted 12 percent.
NAR President William E. Brown says it's not only prospective homebuyers who are facing housing issues; many middle-income homeowners who benefit from the mortgage interest deduction could be slapped with a tax increase if some of the tax reform proposals currently being discussed go through. A recently study commissioned by NAR estimated taxes would rise on average by $815 each year for homeowners with adjusted gross incomes between $50,000 and $200,000. Furthermore, home values could shrink by an average of more than 10 percent, with areas with higher property taxes or state income taxes experiencing an even steeper decline.
On a regional basis, existing-home sales in the Northeast dipped 2.7 percent to an annual rate of 730,000, and are now 2.7 percent below a year ago. The median price sales price was $267,700, a 1.6 percent annual increase.
Sales in the Midwest rose 3.8 percent to 1.36 million, down 0.7 percent from the previous April. The median price rose 7.8 percent to $194,500.
The South's sales were 5.0 percent lower than in March at 2.30 million, and 3.6 percent higher on an annual basis. The median price in the South was $217,700, a 7.9 percent gain.
Sales fell 3.3 percent in the West to a rate of 1.18 million, but are still 3.5 percent above a year ago. The median price in the West was $358,600, up 6.8 percent from April 2016.