NAR: Existing-Home Sales Fell 3.3% In April Due Mainly To Low Inventory

Posted by Patrick Barnard on May 21, 2015 No Comments
Categories : Residential Mortgage

Existing-home sales decreased 3.3% to a seasonally adjusted annual rate of 5.04 million in April – down from an upwardly revised 5.21 million in March, the National Association of Realtors (NAR) reports.

Despite the drop, existing-home sales have increased year over year for seven consecutive months and are still 6.1% above a year ago.

Lawrence Yun, chief economist for NAR, says the lack of inventory is the main reason existing-home sales failed to keep pace with the impressive 6.1% month-over-month gain seen in March.

‘April's setback is the result of lagging supply relative to demand and the upward pressure it's putting on prices,’ Yun says in a release. ‘However, the overall data and feedback we're hearing from Realtors continues to point to elevated levels of buying interest compared to a year ago. With low interest rates and job growth, more buyers will be encouraged to enter the market unless prices accelerate even higher in relation to incomes.’

Total housing inventory at the end of April increased 10.0% to reach 2.21 million existing homes for sale – a 5.3-month supply at the current sales pace, up from 4.6 months in March. However, this was 0.9% below a year ago, when there were 2.23 million existing homes for sale.

The median existing-home price for all housing types in April was $219,400, which is 8.9% above April 2014.

Because of the lack of inventory, existing homes sold faster in April compared to previous months. On average, an existing home was on the market for 39 days, compared to 42 days in July 2013 and 37 days in June 2013.

Short sales were on the market the longest in April at a median of 180 days, while foreclosures sold in 50 days and non-distressed homes took 38 days. Nearly half (46%) of homes sold in April were on the market for less than a month.

‘Housing inventory declined from last year and supply in many markets is very tight, which, in turn, is leading to bidding wars, faster price growth and properties selling at a quicker pace,’ says Yun. ‘To put it in perspective, roughly 40 percent of properties sold last month went at or above asking price, the highest since NAR began tracking this monthly data in December 2012.’

The percent share of first-time home buyers remained at 30% in April for the second consecutive month. First-time buyers represented 29% of all buyers in April 2014.

About 24% of transactions in April were all-cash, according to the report – unchanged compared to March but down 32% compared to April 2014. Individual investors purchased 14% of homes in April, unchanged from March and down from 18% compared to April 2014. The report says 71% of investors paid cash in April.

Regionally, existing-home sales decreased 6.8%, year over year, in the South, 3.1% in the Northeast and 1.7% in the West. The Midwest saw existing-home sales increase 11.4% from a year ago.

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