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April Sales of Existing Homes Up but Supply Constrained

Existing-home sales rose in all regions in April but remain below underlying demand because of limited inventory and tight credit, according to the National Association of Realtors®

By Toby Tobin
Palm Coast, FL – May 22, 2013 – 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® in its monthly report today. All regions are showing strong price gains from a year ago.
Total existing-home sales (1) which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.6 percent to a seasonally adjusted annual rate of 4.97 million in April from an upwardly revised 4.94 million in March.  Resale activity is 9.7 percent above the 4.53 million-unit level in April 2012.
 
Lawrence Yun, NAR chief economist, said the market is solidly recovering.  “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 percent stronger than a year ago, but sales are running only about 10 percent 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 home buyer 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.
 
Total housing inventory at the end of April rose 11.9 percent, a seasonal increase to 2.16 million existing homes available for sale, which represents a 5.2-month supply(2) at the current sales pace, compared with 4.7 months in March.  Listed inventory is 13.6 percent below a year ago, when there was a 6.6-month supply, with current availability tighter in the lower price ranges.
 
The national median existing-home price(3) for all housing types was $192,800 in April, up 11.0 percent from April 2012.  The last time there were 14 consecutive months of year-over-year price increases was from April 2005 to May 2006.
 
Distressed homes(4) – foreclosures and short sales – accounted for 18 percent of April sales, down from 21 percent in March and 28 percent in April 2012.  Eleven percent of April sales were foreclosures, and 7 percent were short sales.  Foreclosures sold for an average discount of 16 percent below market value in April, while short sales were discounted 14 percent.
 
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 3.45 percent in April from 3.57 percent in March; it was 3.91 percent in April 2012.
 
The median time on market for all homes was 46 days in April, down sharply from 62 days in March, and is 45 percent faster than the 83 days on market in April 2012.
NAR President Gary Thomas said market conditions have flipped in the past year.  “With homes selling in half the time it took to sell a year ago, buyers must be both decisive and prudent,” he said.  “Advice with contract terms and negotiations is where the expertise of a Realtor® shines for both buyers and sellers.”
 
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 percent were on the market for a year or longer.
 
First-time buyers accounted for 29 percent of purchases in April, compared with 30 percent in March and 35 percent in April 2012.
 
All-cash sales were at 32 percent of transactions in April, up from 30 percent in March; they were 29 percent in April 2012.  Individual investors, who account for most cash sales, purchased 19 percent of homes in April, unchanged from March; they were 20 percent in April 2012.
 
Single-family home sales rose 1.2 percent to a seasonally adjusted annual rate of 4.38 million in April from 4.33 million in March, and are 9.0 percent above the 4.02 million-unit level in April 2012.  The median existing single-family home price was $193,300 in April, which is 11.0 percent above a year ago.
 
 Existing condominium and co-op sales declined 3.3 percent to an annualized rate of 590,000 units in April from 610,000 in March, but are 15.7 percent above the 510,000-unit pace a year ago.  The median existing condo price was $189,500 in April, up 11.3 percent from April 2012.
 
Regionally, existing-home sales in the Northeast rose 1.6 percent to an annual rate of 640,000 in April and are 4.9 percent above April 2012.  The median price in the Northeast was $245,100, up 5.1 percent from a year ago.
 
Existing-home sales in the Midwest fell 3.4 percent in April to a pace of 1.12 million but are 9.8 percent above a year ago.  The median price in the Midwest was $149,300, up 6.7 percent from April 2012.
 
In the South, existing-home sales rose 2.0 percent to an annual level of 2.01 million in April and are 14.9 percent above April 2012.  The median price in the South was $168,700, which is 10.6 percent above a year ago.
 
Existing-home sales in the West increased 1.7 percent to a pace of 1.20 million in April and are 4.3 percent above a year ago.  Given limited choices and multiple bidding, the median price in the West was $263,600, up 17.5 percent from April 2012.

 
NOTE:  For local information, please contact the local association of Realtors® for data from local multiple listing services.  Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.
 
(1)Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services.  Changes in sales trends outside of MLSs are not captured in the monthly series.  NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
 
Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit.  Because of these differences, it is not uncommon for each series to move in different directions in the same month.  In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
 
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months.  Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity.  For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns.  However, seasonal factors cannot compensate for abnormal weather patterns.
 
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began.  Prior to this period, single-family homes accounted for more than nine out of 10 purchases.  Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
 
(2)Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).
 
(3)The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to a seasonality in buying patterns.  Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.  Changes in the composition of sales can distort median price data.  Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
 
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets.  However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.
 
(4)Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.
 
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Don "Toby" Tobin is a licensed real estate professional affiliated with Take Action Properties LLC. Toby is a member of the Flagler County Association of Realtors®, the Florida Association of Realtors, Enterprise Flagler, Flagler Home Builders Association, and the National Association of Realtors.

GoToby.com proivdes real estate news, commentary, and analysis for Palm Coast and Flagler Country Florida, as well as Realtor® referrals and consultation to buyers, sellers, and developers.