Driven mainly by a surge in sales in the Midwest and a decent increase in the Northeast, existing-home sales reached an adjusted annual rate of about 5.45 million in April – an increase of 1.7% compared with about 5.36 million in March and an increase of 6.0% compared with April 2015, according to the National Association of Realtors (NAR).
The increase comes despite the fact that ongoing inventory shortages and rising home prices are significantly impacting affordability, especially for lower-income and first-time home buyers.
In a release, Lawrence Yun, chief economist for NAR, says the increase was driven primarily by “very low mortgage rates and modest seasonal inventory gains.” He says these factors “encouraged more households to search for and close on a home.”
“Except for in the West – where supply shortages and stark price growth are hampering buyers the most – sales are meaningfully higher than a year ago in much of the country,” he adds.
The average price for a single-family home (including condominiums) in April was $232,500, an increase of 6.3% compared with April 2015, when the average price was $218,700. It was the 50th consecutive month that the average home price increased on a year-over-year basis, according to NAR.
As of the end of April, there were about 2.14 million existing homes available for sale – an increase of 9.2% compared with March but a decrease of 3.6% compared with April 2015. That’s about a 4.7-month supply at the current sales pace – up from 4.4 months in March.
“The temporary relief from mortgage rates currently near three-year lows has helped preserve housing affordability this spring, but there’s growing concern a number of buyers will be unable to find homes at affordable prices if wages don’t rise and price growth doesn’t slow,” Yun says.
“Looking ahead, with demand holding steady and supply levels still far from sufficient, the market for entry-level and mid-priced homes will likely continue to be the most competitive heading into the summer months,” he says.
The share of first-time buyers in April was about 32%, up from 30% in March and up from 30% in April 2015.
About 24% of transactions in April were all-cash sales – down from 25% in March and unchanged from a year earlier. Individual investors, who account for many cash sales, purchased 13% of homes in April – down from 14% in March and down from 14% in April 2015. Sixty-nine percent of investors paid cash in April.
About 7% of all sales in April were distressed sales (foreclosures and short sales) – down from 8% in April and down from 10% a year earlier.
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