Existing Home Sales Fall Short of Expectations

Existing home sales in April failed both to match theirrncorresponding numbers in March and to live up to the consensus of analysts inrnadvance of this morning’s National Association of Realtors® (NAR) report. Sales ofrnexisting single family homes, condominiums, and coops were at a seasonallyrnadjusted annual rate of 5.04 million units in April, down 3.3 percent from anrnupwardly revised (from 5.19 million units) 5.21 million in March.  Analysts had expected on average a rate ofrn5.22 million units.</p

NAR tried to put a cheery spin on the news pointing out thatrnsales were 6.1 percent higher than in April 2014, that it was the seventh monthrnof year-over-year increases, and the second month in a row that sales hadrntopped 5 million.  The typical home alsornsold in the shortest time frame in almost two years.</p

The decline was almost entirely due to single family homernsales which were down 3.7 percent to a seasonally adjusted annual rate of 4.43rnmillion in April from 4.60 million in March. rnThose sales remain 6.5 percent higher than a year earlier.  Condo and co-op sales were unchanged from Marchrnat a rate of 610,000 but the rate was up 3.4 percent year-over-year.</p

Lawrence Yun, NAR chief economist,rnsaid, “April’s setback is the result of lagging supply relative to demandrnand the upward pressure it’s putting on prices. rnHowever, the overall data and feedback we’re hearing from Realtors®rncontinues to point to elevated levels of buying interest compared to a yearrnago. With low interest rates and job growth, more buyers will be encouraged tornenter the market unless prices accelerate even higher in relation to incomes.”</p

The median existing-home price for allrnhousing types in April was $219,400, an 8.9 percent gain from a year earlierrnand the 38^th consecutive month of year-over-year price appreciation.  It is also the largest price increase since arn10.1 percent annual change in January 2014. The median price for an existingrnsingle-family home was $221,200, up 10.0 percent and the median condo price wasrn$206,100, a 0.4 percent annual increase.</p

Inventory increased by 10.0 percentrnfrom March to April with 2.21 million existing homes for sale, a 5.3 monthrnsupply at the current sales pace compared to 4.6 months in March.  The inventory is 0.9 percent below the Aprilrn2014 level.</p

“Housing inventory declined fromrnlast year and supply in many markets is very tight, which in turn is leading tornbidding wars, faster price growth and properties selling at a quickerrnpace,” says Yun. “To put it in perspective, roughly 40 percent ofrnproperties sold last month went at or above asking price, the highest since NARrnbegan tracking this monthly data in December 2012.”</p

With demand far exceeding supply,rnproperties sold in April faster (39 days) than at any time since July 2013 (42rndays) and the second shortest time (37 days in June 2013) since NAR beganrntracking in May 2011. Short sales were on the market the longest at a median ofrn180 days in April, while foreclosures sold in 50 days and non-distressed homesrntook 38 days. Nearly half (46 percent) of homes sold in April were on thernmarket for less than a month.</p

The percent share of first-time buyers</bremained at 30 percent in April for the second consecutive month. The share wasrn1 percentage point higher than a year earlier.  Individual investors accounted for 14 percentrnof sales, unchanged from March but down by 4 points from April 2014, and 71rnpercent of them paid cash for their purchase. rnTwenty-four percent of all sales were cash transactions, down from aboutrna third the previous April.  </p