Existing home sales improved for the first time in 2014 during April, although not as much as economists predicted, as the inventory of homes on the market increased, sending some mixed signals while suggesting the housing market is getting a bit of traction.
The National Association of Realtors reported Thursday morning that existing home sales, which are completed transactions for single-family homes, townhomes, condominiums and co-ops, rose 1.3 percent in April from March to a seasonally adjusted annual rate of 4.65 million units. Economists called for a 4.68 million unit annual rate. In March, sales declined by 0.2 percent to an annualized pace of 4.59 million units.
Compared to April 2013 (4.99 million unit annual rate), existing home sales were down by 6.8 percent. Taking a broader view, sales are down by 15 percent from the record high of 5.38 million units last July.
Sales in the South were up by 1.0 percent to an annual rate of 1.94 million units and sales in the West improved by 4.9 percent to a 1.08 million annual clip in April. This gains offset a decline in the Midwest of 1.0 percent to an annual rate of 1.03 million. Sales in the Northeast were flat at a 600,000-unit annual rate.
Sales of single-family homes, by far the largest segment, edged ahead by 0.5 percent from March to April to an annual rate of 4.06 million homes, which is 7.7 percent lower than last April’s pace. Condominium and co-op sales rose 7.3 percent to a 590,000 annual rate to be flat with last April.
Total inventory of properties on the market at the end of April swelled 16.8 percent from March to 2.29 million. At the current sales pace, that’s a 5.9-month supply, the highest level since August 2012 and nearing the 6-month stockpile that economists consider healthy.
The median price for all types of homes was $201,700 in April, an increase of 5.2 percent from last April. Four out of 10 homes sold in less than a month, according to NAR President Steve Brown. It was the fourth consecutive month of houses selling faster.
Improving Housing Market
The aggregate points to a housing market getting its footing some last month after a harsh winter. Inventory rose to a proper balance of supply and demand and the trend in rising prices is slowing, which “bodes well for preserving favorable affordability conditions in much of the country,” according to NAR Chief Economist Lawrence Yun in a statement today.
Fewer houses to pick from and the frigid cold winter, combined with still tight lending practices by banks (first time buyers accounted for only 30% of all buyers last month) and interest rates edging ahead in 2013, kept buyers on the sidelines in the first quarter. This is likely going to result in the annual rate not being able to catch-up to last year for total sales. Yun is optimistic going forward, though, saying, “More inventory and increased new-home construction will help to foster healthy market conditions.” To Yun’s point, the Commerce Department reported last Friday that housing starts jumped from an annual rate of 947,000 in March to 1.07 million in April, outpacing economist predictions of a 980,000 annual rate. That surge was led by the volatile multi-unit segment, which rose 40 percent month-over-month. The single-unit segment was up 0.8 percent to an annual rate of 649,000.
All in all, the housing construction business looks to be getting some legs as a contributor to economic growth in the second quarter after a sluggish start to the year.
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