Existing home sales and prices rose in April, indications the housing recovery is underway, according today’s report from the National Association of Realtors.
Existing home sales and prices improved in April across all regions of the United States, according to data released today by the National Association of Realtors.
Completed transactions of existing homes – including single-family homes, townhomes, condominiums and co-ops, rose 3.4 percent to a seasonally adjusted annual rate of 4.62 million in April, the association reported. Sales are up 10 percent from the 4.2 million level for April 2011.
Industry analysts view the data as further indications the housing market has stabilized and a recovery is gaining traction. Employment gains, attractive pricing and record low interest rates are helping to stimulate sales.
“It is no longer just the investors who are taking advantage of high affordability conditions,” said Lawrence Yun, chief economist for the association. “A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices.”
Prices jumped 10.1 percent to $177,400 for the national median existing home, following a 3.1 percent increase in March, said the association. Yun estimates prices will post a modest gain of 1 percent to 2 percent for 2012, and show stronger improvement in 2013.
Inventories are down more than 20 percent compared to a year ago to 2.54 million existing homes available for sale. At the current sales pace, the inventory would last for 6.6 months, compared to a more than nine-month supply for April 2011. The record for unsold inventory was 4.04 million in July 2007, according to the association.
The reduction of both listed and shadow inventory is bringing balance to the market, and shortages in some areas are actually working to the seller’s advantage. According to Yun, “A diminishing share of foreclosed property sales is helping home values. Moreover, an acute shortage of inventory in certain markets is leading to multiple biddings and escalating price conditions.”
Areas with a tight housing supply include Washington, D.C., the Miami and Naples areas in Florida, North Dakota, Phoenix, Orange County, CA, and Seattle. Stronger price increases are expected in most of these areas, Yun said.
Short sales and sales of foreclosed homes – deeply discounted transactions – accounted for 28 percent of sales in April, the association reported. Investors accounted for 20 percent of transactions, while first-time buyers made up 35 percent of purchases. Foreclosures, sold at an average discount of 21 percent, accounted for 17 percent of the sales, while short sales, discounted an average of 14 percent, made up another 11 percent of sales. Tight lending standards continue to constrain existing home sales, though mortgage rates remain at record lows.