Existing Home Sales Reverse Course, Down 3%

Existing home sales put an end to two straight months of gains, retreating in April on both a monthly and annual basis.  The National Association of Realtors® said the sales of single-family homes, townhouses, condos, and cooperative apartments dropped by 2.5 percent from March’s estimate of 5.60 million to a seasonally adjusted annual rate of 5.46 million. That put sales at a 1.4 percent deficit when compared to April 2017.  It was the second straight month that sales have lagged on an annual basis.

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Economists polled by Econoday were not looking for greatly improved numbers but results even missed that target.  Estimates ranged from 5.48 million to 5.64 million.  The consensus was for no change from the March 5.60 million number.

Single-family home sales were down by 3.0 percent to a seasonally adjusted annual rate of 4.84 million from 4.99 million in March and are 1.6 percent below the 4.92 million sales pace a year ago. Condo and co-op sales continued their recent strong performance, rising 1.6 percent to 620,000 units, level with sales in April 2017.

What NAR called “staggeringly low inventories” of available homes again got the blame for the disappointing sales volume even though that inventory rose sharply from March. Lawrence Yun, NAR chief economist, says “The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home,” he said. “Realtors®say the healthy economy and job market are keeping buyers in the market for now even as they face rising mortgage rates. However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford.”

The median existing-home price for all housing types in April was $257,900, up 5.3 percent from the median of $245,000 a year ago.  The increase marks the 74th straight month of year-over-year gains. The median existing single-family home price was $259,900, a 5.5 percent annual increase and condo/coop prices rose 3.4 percent to $242,500.

The much-lamented inventory of available housing stock at the end of April was 1.80 million homes.  This was a significant 9.8 percent uptick from March but is still 6.3 percent lower than the 1.92 million homes for sale the previous April.  For-sale listings constitute an estimated 4.0-month supply at the current rate of absorption compared to a 4.2 month supply last year. The inventory has fallen year-over-year for 35 consecutive months.

Properties typically stayed on the market for 26 days in April, down from 30 days in March and 29 days a year ago. Fifty-seven percent of homes sold in April were on the market for less than a month.

“What is available for sale is going under contract at a rapid pace,” said Yun. “Since NAR began tracking this data in May 2011, the median days a listing was on the market was at an all-time low in April, and the share of homes sold in less than a month was at an all-time high.”

“With mortgage rates and home prices continuing to climb, an increase in housing supply is absolutely crucial to keeping affordability conditions from further deterioration,” said Yun. “The current pace of price appreciation far above incomes is not sustainable in the long run.”

First-time buyers accounted for 33 percent of sales in April, the highest share since last July, compared to 30 percent in March and 34 percent a year ago. Individual investors bought 15 percent of homes sold, and 21 percent of transactions were all cash. Distressed sales continue to shrink and are now at the lowest level, a 3.5 percent share, since NAR started tracking them in 2008.

Existing home sales were flat or declined in all four regions and three are now running behind their 2017 levels.  In the Northeast sales fell 4.4 percent to an annual rate of 650,000, putting them 11.0 percent lower than a year ago. The median price in the Northeast was $275,200, which is 2.8 percent above April 2017.

Sales were unchanged in the Midwest from the prior month at an annual rate of 1.29 million and are 3.0 percent below the previous April. The median price in the Midwest was $202,100, an annual increase of 4.6 percent.

The South posted a 2.9 percent decline in sales to an annual rate of 2.33 million but remained above last year’s number by 2.2 percent. The median price was $227,600, up 3.9 percent from a year ago.

There was a 3.3 percent drop in existing-home sales in the West. The annual rate of 1.19 million was 0.8 percent lower than a year earlier.  Still, prices rose on an annual basis by 6.2 percent to a median of $382,100.

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