April Existing-Home Sales Show Modest Improvement Behind Gaining Inventory
WASHINGTON (May 22, 2014) – Existing-home sales increased for the first time this year in April, while inventory meaningfully increased and home price growth moderated, according to the National Association of Realtors®. Monthly sales gains in the West and South offset a modest decline in the Midwest while the Northeast was unchanged.
Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.3 percent to a seasonally adjusted annual rate of 4.65 million in April from 4.59 million in March, but are 6.8 percent below the 4.99 million-unit level in April 2013.
Lawrence Yun, NAR chief economist, expected the improvement. “Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point,” he said. “Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”
Total housing inventory2 at the end of April jumped 16.8 percent to 2.29 million existing homes available for sale, which represents a 5.9-month supply at the current sales pace, up from 5.1 months in March. Unsold inventory is 6.5 percent higher than a year ago, when there was a 5.2-month supply.
“We’ll continue to see a balancing act between housing inventory and price growth, which remains stronger than normal simply because there have not been enough sellers in many areas. More inventory and increased new-home construction will help to foster healthy market conditions,” Yun added.
The median existing-home price3 for all housing types in April was $201,700, which is 5.2 percent above April 2013; in the first quarter the median price was 8.6 percent above a year earlier. “Current price data suggests a trend of slower growth, which bodes well for preserving favorable affordability conditions in much of the country,” Yun said.
Earlier this month, NAR reported the market share of all-cash purchases has risen despite a downtrend in distressed home sales and investor activity. Distressed homes4 – foreclosures and short sales – accounted for 15 percent of April sales, down from 18 percent in April 2013.
Ten percent of April sales were foreclosures, and 5 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in April, while short sales were discounted 10 percent.
NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, said there was some heating of the market last month. “The typical time on market shrunk in April, with four out of 10 homes selling in less than a month,” he said. “Homes that show well and are properly priced tend to sell the fastest. More housing inventory gives buyers better choices, and takes the pressure off of the buying process, which is a welcome sign, especially for first-time buyers.”
Properties sold faster for the fourth straight month in April, reflecting the prolonged lag in inventory relative to demand. The median time on market for all homes was 48 days in April, down from 55 days in March; it was 43 days on market in April 2013.
Short sales were on the market for a median of 96 days in April, while foreclosures typically sold in 56 days and non-distressed homes took 45 days. Forty-one percent of homes sold in April were on the market for less than a month.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.34 percent in April, unchanged from March but up from 3.45 percent in April 2013.
First-time buyers continue to represent fewer than one-third of all buyers at 29 percent in April, down from 30 percent in March; they were 29 percent in April 2013.
All-cash sales comprised 32 percent of transactions in April, compared with 33 percent in March and 32 percent in April 2013. Individual investors, who account for many cash sales, purchased 18 percent of homes in April, up from 17 percent in March; they were 19 percent in April 2013. Seven out of 10 investors paid cash in April.
Single-family home sales inched up 0.5 percent to a seasonally adjusted annual rate of 4.06 million in April from 4.04 million in March, but are 7.7 percent below the 4.40 million pace a year ago. The median existing single-family home price was $201,100 in April, up 4.7 percent from April 2013.
Existing condominium and co-op sales rose 7.3 percent to an annual rate of 590,000 units in April from 550,000 units in March, but are unchanged from April 2013. The median existing condo price was $205,500 in April, which is 8.3 percent higher than a year ago.
Regionally, existing-home sales in the Northeast were unchanged at an annual rate of 600,000 in April, but are 6.3 percent below April 2013. The median price in the Northeast was $244,000, down 0.4 percent from a year ago.
Existing-home sales in the Midwest slipped 1.0 percent in April to a pace of 1.03 million, and are 9.6 percent below a year ago. The median price in the Midwest was $157,200, which is 5.8 percent above April 2013.
In the South, existing-home sales increased 1.0 percent to an annual level of 1.94 million in April, but are 3.5 percent below April 2013. The median price in the South was $173,200, up 3.2 percent from a year ago.
Existing-home sales in the West rose 4.9 percent to a pace of 1.08 million in April, but are 10.0 percent below a year ago. The median price in the West was $291,200, which is 9.7 percent above April 2013.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
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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.
1Existing-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.
2Total 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).
3The 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 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.
4Distressed 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 nar.realtor.
Realtor.com®, NAR’s listing site, posts metro area median listing price and inventory data at: www.realtor.com/data-portal/Real-Estate-Statistics.aspx.
The Pending Home Sales Index for April will be released May 29, and existing-home sales for May is scheduled for June 23; release times are 10:00 a.m. EDT.