For the first time this year, existing home sales increased, meanwhile inventory increased and home price growth moderated, according to the National Association of Realtors. With more inventory available and a slowing of home price increases, the market is opening up for increased sales levels. Further, properties sold faster for the fourth straight month in April, reflecting the prolonged lag in inventory relative to demand. The median time on market for all homes was 48 days in April, down from 55 days in March.
Although existing home sales improved 1.3 percent in April, they remain 6.8 percent below April 2013. Dr. Lawrence Yun, NAR Chief Economist notes that 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. Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”
Inventory levels shifting
Perhaps the most welcome news is that inventory levels rose 16.8 percent, hitting a 5.9-month supply at the current sales pace, up from 5.1 months in March. NAR reports that 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,” Dr. Yun noted.
Home prices and transaction types
The median existing home price rose 5.2 percent over the last year to $201,700, which Dr. Yun states suggests a trend of slower growth, “which bodes well for preserving favorable affordability conditions in much of the country.”
One in ten sales in April were foreclosures, selling at an average discount of 16 percent below market, while short sales accounted for one in twenty sales, selling at a 10 percent discount. In April, foreclosures typically sold in 56 days (short sales in 96 days), and non-distressed homes sold in 45 days. NAR reports that 41 percent of homes sold last month spent less than 30 days on the market.
All-cash sales accounted for 32 percent of transactions in April, the same as April 2013, and down one percent from March. Individual investors (70 percent of whom paid cash) snapped up 18 percent of homes for sale, an increase of one percent compared to March, but a decrease of one percent compared to April 2013.
First time buyers still account for roughly one in three buyers, but NAR points out that in April, they accounted for 29 percent of sales, dropping a point from March, but remaining the same as April 2013.
Regional performance varied
In the Northeast, existing home sales were unchanged at an annual rate of 600,000 in April, but are 6.3 percent below April 2013. The median price in the Northeast was $244,000, down 0.4 percent from a year ago.
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 in the Midwest was $157,200, which is 5.8 percent above April 2013.
In the South, existing home sales increased 1.0 percent to an annual level of 1.94 million in April, but are 3.5 percent below April 2013. The median price in the South was $173,200, up 3.2 percent from a year ago.
Existing home sales in the West rose 4.9 percent to a pace of 1.08 million in April, but are 10.0 percent below a year ago. The median price in the West was $291,200, which is 9.7 percent above April 2013.