Home Sales Stall; Sellers Need to be Realistic

This one might smart a bit. There were big hopes for home sales in April, with interest rates continuing at unexpectedly low levels, unemployment at a 50-year low, and the spring market supposedly in full swing.  Analysts polled by Econoday expected that the existing home sales number would jump from the annual rate of 5.210 million sales in March to a consensus of 5.350 million, with some forecasting as high as a 5.400 million rate.  Instead, the National Association of Realtors® said existing home sales ticked down even further, adding to the 4.9 percent month-over-month decline in March.

Pre-owned single-family homes, townhomes, condominiums, and cooperative apartments sold at a seasonally adjusted annual rate of 5.19 million in April, down 0.4 percent from March. The year-over-year gap did narrow slightly from the 5.4 percent deficit in March; April sales were down 4.4 percent from the rate of 5.43 million units in April 2018.

Single-family homes sold at a seasonally adjusted annual rate of 4.62 million in April, compared to 4.67 million in March and fell 4.0 percent from sales of 4.81 million a year ago. Existing condominium and co-op sales did rise 5.6 percent from March to a seasonally adjusted annual rate of 570,000 but remained 8.1 percent below their sales level the prior April.  

Lawrence Yun, NAR's chief economist, said he is not overly concerned about the 0.4% dip in sales and expects moderate growth very soon. "First, we are seeing historically low mortgage rates combined with a pent-up demand to buy, so buyers will look to take advantage of these conditions," he said. "Also, job creation is improving, causing wage growth to align with home price growth, which helps affordability and will help spur more home sales."

The median existing-home price for all housing types in April was $267,300, an annual increase of 3.6% from $257,900 in April 2018.  It was the 86th straight month of year-over-year gains.  The median existing single-family home price was 3.7 percent on an annual basis to $269,300 and the median existing condo price of $251,000 represented a 3.4 percent annual gain.  

The inventory of available homes increased to 1.83 million from 1.67 million in March and was 1.7 percent higher than the 1.80 million units available a year ago. Unsold inventory is at a 4.2-month supply at the current sales pace, up from 3.8 months in March and 4.0 months in April 2018.

"We see that the inventory totals have steadily improved, and will provide more choices for those looking to buy a home," Yun said. He notes that sellers have to realize that price growth has moderated. "When placing their home on the market, home sellers need to be very realistic and aware of the current conditions."

Properties remained on the market for an average of 24 days in April, down from 36 days in March and 26 days a year ago. Fifty-three percent of homes sold in April were on the market for less than a month.

College loan debt continues to hinder millennial home buyers according to Yun. "Given the record high job openings in the construction sector, some may want to take a gap year to work there and save. and thereby lessen the student debt burden," he suggests.

"I think the market had a bit of a slow start in the Fall, but Realtors® all over the country have been telling me that April was a nice rebound. We're hopeful and expect that this will continue heading into the summer," said NAR President John Smaby.  "Homes over the last month sold quickly, which is not only a win-win for buyers and sellers, but it's also great for the real estate industry."

First-time buyers were responsible for 32 percent of sales in April, down from the 33% reported both last month and one year ago. All-cash sales accounted for 20 percent of transactions in April, down from 21 percent in both March and a year earlier and 16 percent of all sales were to individual investors, who account for many cash sales. Only 3 percent of total sales were considered distressed, the same as in March but down 1 point from the prior April.

The only region to see an increase in sales in April was the West, up 1.8 percent to an annual rate of 1.11 units.  Sales in the region however remain down 5.9 percent from one year earlier. The median price in the West was $395,100, up 1.3% from April 2018.

Sales in the Northeast decreased 4.5 percent from both the previous month and from April 2018 to an annual rate of 640,000 units.  The median price grew 0.9 percent to $277,700.

Sales in the Midwest were flat at 1.17 million units, a decline of 7.9 percent year-over-year. The median price in the region rose 5.5 percent on an annual basis to $210,500.  

Existing-home sales in the South dropped a modest 0.4 percent to an annual rate of 2.27 million in April, down 1.7 percent from a year ago. The median price was $236,800, representing annual appreciation of 4.4 percent.