Higher Prices Slow Home Sales in April

home prices
home prices

The National Association of Realtors (NAR) reports that the seasonally adjusted annual rate of existing home sales in April rose 0.6% to 4.97 million, from an upwardly revised total of 4.94 million in March. However, sales are up 9.7% year-over-year for the month. April sales of existing homes were the highest since the tax credit period of November 2009, when sales peaked at 5.44 million.

Housing inventory rose again in April, up 11.9% to 2.16 million homes, which is equal to a supply of 5.2 months, compared with a 4.7-month supply in March. Listed inventory is down 13.6% year-over-year, when there was a 6.6 month supply available.

According to the NAR, the national median existing home price in April was $192,800, up 11% compared with April 2012 and the 14th consecutive month to see a price gain. The last time housing prices went on such a string of price increases was the period between April 2005 and May 2006.

NAR's chief economist 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.

Foreclosed and short sales accounted for 18% of April sales, down from 21% of March sales, and below the 28% share in April 2012. Foreclosures sold at an average 16% discount to the April median price, while short sales sold at a discount of 14%. Both discounts increased slightly month-over-month.

Existing, non-distressed homes were on the market for an average of 44 days, while foreclosed homes were on the market for an average of 43 days and short sales took a median of 73 days to sell.

Higher selling prices and higher interest on mortgage loans are combining to slow existing home sales. The inventory numbers, however, continue to look solid. As long as inventory does not fall dramatically, existing home sales should continue to improve slowly.

Filed under: 24/7 Wall St. Wire, Housing, Research