Home Sales Held Back by Limited Inventory, Tight Credit

 

Existing-home sales rose in April but remain below underlying demand because of limited inventory and tight credit, according to the NATIONAL ASSOCIATION OF REALTORS®. All regions are showing strong price gains from a year ago.

Sales of existing single-family homes, townhomes, condominiums, and co-ops increased 0.6% in April and are 9.7% above this time last year. Breakdowns:

• Single-family home sales: +1.2%; 9.0% above April 2012.

• Existing condominium and co-op sales: - 3.3% in April; +15.7% above the pace set a year ago.

The real estate market is solidly recovering, said NAR Chief Economist Lawrence Yun.

“The robust housing market recovery is occurring in spite of tight access to credit and limited inventory. Without these frictions, existing-home sales easily would be well above the 5-million unit pace,” he said. “Buyer traffic is 31% stronger than a year ago, but sales are running only about 10% higher. It’s become quite clear that the only way to tame price growth to a manageable, healthy pace is higher levels of new home construction.”

Existing-home sales are at the highest pace since November 2009, when the market spiked to 5.44 million in response to the homebuyer tax credit. Total sales have been above year-ago levels for 22 consecutive months, while prices show 14 consecutive months of year-over-year price increases.

Supply of Homes for Sale

The supply of homes for rose 11.9% in April and at the current pace, it would take 5.2 months to sell all the homes on the market. That compares with a 4.7-month supply of homes for sale in March. Listed inventory is 13.6% below a year ago, when there was a 6.6-month supply, with current availability tighter in the lower price ranges.

Market conditions have flipped in the past year to favor sellers, said NAR President Gary Thomas. “With homes selling in half the time it took to sell a year ago, buyers must be both decisive and prudent,” he said.




*11% of April sales were foreclosures, and 7% were short sales.

Foreclosures sold for an average discount of 16% below market value in April, while short sales were discounted 14%.

Short sales were on the market for a median of 73 days, while foreclosures typically sold in 43 days and non-distressed homes took 44 days. Forty-four percent of all homes sold in April were on the market for less than a month, while only 8% were on the market for a year or longer.

Who’s Buying Homes?


 Regional Existing-Home Sales

Northeast

• Sales: Up 1.6% in April; 4.9% above April 2012.

• Median price: $245,100, up 5.1% from a year ago.

Midwest:

• Sales: Down 3.4% in April; 9.8% above a year ago.

• Median price: $149,300, up 6.7% from April 2012.

South

• Sales: Rose 2.0% in April; 14.9% above April 2012.

• Median price: $168,700, 10.6% above a year ago.

West

• Sales: Increased 1.7% in April; 4.3% above a year ago.

• Median price: $263,600, up 17.5% from April 2012.

Source: National Association of Realtors