WASHINGTON (May 21, 2015) — Despite properties typically selling faster than at any time since July 2013, existing–home sales slowed in April but remained above an annual sales pace of five million for the second straight month, according to the National Association of Realtors®. All major regions except for the Midwest experienced sales declines in April.
Total existing-home sales1, which are completed transactions that include single–family homes, townhomes, condominiums and co–ops, declined 3.3 percent to a seasonally adjusted annual rate of 5.04 million in April from an upwardly revised 5.21 million in March. Despite the monthly decline, sales have increased year–over–year for seven consecutive months and are still 6.1 percent above a year ago.
Lawrence Yun, NAR chief economist, says sales in April failed to keep pace with the robust 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,” he said. “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 inventory2 at the end of April increased 10.0 percent to 2.21 million existing homes available for sale, but is still 0.9 percent below a year ago (2.23 million). Unsold inventory is at a 5.3–month supply at the current sales pace, up from 4.6 months in March.
The median existing–home price3 for all housing types in April was $219,400, which is 8.9 percent above April 2014. This marks the 38th consecutive month of year–over–year price gains and is the largest since January 2014 (10.1 percent).
With demand far exceeding supply, properties sold in April faster (39 days) than at any time since July 2013 (42 days) and the second shortest time (37 days in June 2013) since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 180 days in April, while foreclosures sold in 50 days and non–distressed homes took 38 days. Nearly half (46 percent) 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 buyers remained at 30 percent in April for the second consecutive month. First–time buyers represented 29 percent of all buyers in April 2014.
According to Freddie Mac, the average commitment rate for a 30–year, conventional, fixed–rate mortgage remained below 4.00 percent for the fifth straight month, falling in April to 3.67 percent from 3.77 percent in March.
NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., cautions that closings for some home sales could drag after August 1 and into the fall as lenders transition to the new closing procedures and documentation required by the Consumer Financial Protection Bureau’s Real Estate Settlement and Procedures Act and Truth in Lending Act, or RESPA–TILA, integrated disclosure rule. “There likely will be bumps in the closing process while all parties get used to the new requirements,” he said. “We hope that the move away from the HUD–1 is smooth, but even if only 10 percent of transactions experience closing issues, that’s as many as 40,000 transactions a month.”
Polychron — testifying before Congress on May 14 — advocated for a grace period through the end of 2015, which would delay enforcement of the new rules to the slower winter months.
All–cash sales were 24 percent of transactions in April, unchanged from March and down considerably from a year ago (32 percent). Individual investors, who account for many cash sales, purchased 14 percent of homes in April, unchanged from last month and down from 18 percent in April 2014. Seventy–one percent of investors paid cash in April.
Distressed sales4 — foreclosures and short sales — were 10 percent of sales in April, unchanged from March and below the 15 percent share a year ago. Seven percent of April sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 20 percent below market value in April (16 percent in March), while short sales were also discounted 14 percent (16 percent in March).
Single–family and Condo/Co–op Sales
Single–family home sales declined 3.7 percent to a seasonally adjusted annual rate of 4.43 million in April from 4.60 million in March, but are still 6.5 percent above the 4.16 million pace a year ago. The median existing single–family home price was $221,200 in April, up 10.0 percent from April 2014.
Existing condominium and co–op sales were at a seasonally adjusted annual rate of 610,000 units in April (unchanged from March) and are 3.4 percent higher than April 2014 (590,000 units). The median existing condo price was $206,100 in April, which is 0.4 percent higher than a year ago.
April existing–home sales in the Northeast declined 3.1 percent to an annual rate of 620,000, but are 1.6 percent above a year ago. The median price in the Northeast was $253,200, which is 3.6 percent higher than April 2014.
In the Midwest, existing–home sales increased 1.7 percent to an annual rate of 1.22 million in April, and are 13.0 percent above April 2014. The median price in the Midwest was $173,700, up 11.4 percent from a year ago.
Existing–home sales in the South declined 6.8 percent to an annual rate of 2.04 million in April, but are still 3.6 percent above April 2014. The median price in the South was $189,400, up 8.5 percent from a year ago.
Existing–home sales in the West decreased 1.7 percent to an annual rate of 1.16 million in April, but are still 6.4 percent above a year ago. The median price in the West was $318,700, which is 10.0 percent above April 2014.
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 Realtor.org.
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