Posted: Friday, May 23rd 2014 at 8:32am
Sales of existing homes up 1.3 percent in April; new homes sales also up
By The Associated Press
WASHINGTON (AP) -- Sales of existing U.S. homes rebounded slightly in April, but the pace of buying remained below last year's level. New home sales were also up.
The National Association of Realtors said Thursday that sales rose 1.3 percent from March to a seasonally adjusted annual rate of 4.65 million. Purchases of homes over the past 12 months have dropped 6.8 percent.
Much of the gains were concentrated in the volatile condominium market, which experienced growth of 7.3 percent. Sales of single-family homes were up just 0.5 percent last month.
Nearly five years into the recovery from the Great Recession, real estate sales have yet to return to their historic averages. The solid gains made through the middle of 2013 have evaporated, while demand continues to be strong for the most expensive properties and faltering for starter homes and those priced for middle class buyers.
Home-buying continues to run significantly below their 2013 pace, when 5.1 million existing-homes were bought. That's well below the 5.5 million that is consistent with a healthy housing market.
Snowstorms and cold weather delayed sales in the Midwest and Northeast during first two months of 2014. Would-be buyers are also wrestling with higher prices and rising interest rates over the past 12 months, causing the real estate market to lose some of its momentum from last year.
But in a positive sign, the April report shows that would-be sellers are shaking off the nasty winter and listing their homes for sale. The market has a 5.9-month supply of homes, up from 5.2 months a year ago.
"With the warmer weather and the `promise' of higher prices, more homeowners put their homes on the market," said Jennifer Lee, a senior economist at BMO Capital Markets.
Prices continue to increase, yet the limited demand appears to have eased the pace of growth. Median prices rose 5.2 percent to $201,700 in April, the slowest growth rate since March 2012, the Realtors said.
Buying picked up last month in the West and South, gains that were offset slightly by a decline in the Midwest and flat sales in the Northeast.
The upper-tier of the market remains healthier than the low-end. Sales continued to fall last month for homes priced below $250,000, while rising for homes sold for more than $750,000. First-time buyers-who tend to purchase lower priced properties-represented 29 percent of all sales, much less than the historical average of 40 percent.
Existing-home sales began to slow in the second half of 2013 as mortgage rates crept up from historic lows. Higher home prices, partly due to meager home listings, began to push some buyers out of the market.
Average rates for fixed, 30-year mortgages last week were 4.2 percent, compared to 3.51 percent a year ago. "Rising mortgage rates can account for much of the sluggishness in existing home sales over the past year," John Krainer, a senior economist at the Federal Reserve Bank of San Francisco, wrote this week.
Rates have steadily fallen by 0.33 percentage points since January 2014, although that has yet to boost purchases. An index measuring applications for new mortgages fell 3 percent over the past week and 12 percent over the past year, the Mortgage Bankers Association said Wednesday.
NEW HOME SALES
The Commerce Department said Friday that sales of new homes rose 6.4 percent last month to a seasonally adjusted annual rate of 433,000. That compares with an upwardly revised annual pace of 407,000 in March, when purchases fell 6.9 percent. Buying had dropped 4.4 percent in February, in part because of winter snowstorms.
Demand for newly built homes remains one of the missing pieces of the nearly 5-year-old recovery from the Great Recession. A lack of affordability has limited buying around the country. Sales of new homes are running at roughly half the rate of a healthy real estate market.
Warmer weather has yet to heat up the housing market after a harsh winter slowed sales in January and February. Higher prices and mortgage rates over the past year have sidelined many would-be buyers.
Sales during April surged in the Midwest and edged up in the South. Home-buying was flat in the West and fell in the Northeast.
Yelena Shulyatyeva, an economist at BNP Paribas, noted that the 47.4 percent increase in Midwest sales likely came from the start of the spring buying season and that similar levels of growth are "not likely to continue."
"The broader trend remains one of weak underlying demand," Shulyatyeva said in a client note.
New-home sales have declined 4.2 percent over the past 12 months.
The median sales price, which can be volatile, fell a slight 2.1 percent during the past month to $275,800.
Buying has been slow across much of the country after climbing in the first half of 2013. Last year's gains and a limited supply of homes pushed up prices to levels that strained household budgets for potential buyers.
Sales of existing homes in April rose 1.3 percent from March to a seasonally adjusted annual rate of 4.65 million, the National Association of Realtors said Thursday. Purchases of homes over the past 12 months have dropped 6.8 percent. In a healthy housing market, roughly 5.5 million existing homes are purchased each year.
The median price for an existing home has risen 5.2 percent to $201,700.
Home sales growth over the past year has occurred primarily among homes worth more than $750,000. Buying fell during the same period for homes worth less than $250,000, which make up the majority of all purchases.
Much of the increase in construction has been in the apartment sector, a sign that builders expect fewer buyers and more renters. After the housing bust and Great Recession, Americans have been coping with flat wages and job insecurity, making it hard to save for a down payment. The home ownership rate was 64.8 percent at the start of the year, down from a peak of 69.2 percent during 2004.
New homes usually represent about 20 percent of all homes sold. That figure has fallen recently to 10 percent, according to real estate data firm Zillow.
An index of builder confidence for this month fell a percentage point to 45, the National Association of Homebuilders and Wells Fargo reported Thursday. A reading below 50 indicates that builders consider the conditions for new construction to be poor. The index had been above 50 from June through January.
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