In April, existing home sales fell slightly from the previous month, but growing inventory signaled improvement in the market, according to the latest report from the National Association of Realtors.
Total existing home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – retreated 0.4% from March to a seasonally adjusted rate of 5.19 million in April. This report reveals sales are 4.4% below April 2018’s rate.
NAR Chief Economist Lawrence Yun said he is not overly concerned about the 0.4% dip in sales and expects moderate growth very soon.
“First, we are seeing historically low mortgage rates combined with a pent-up demand to buy, so buyers will look to take advantage of these conditions,” Yun said. “Also, job creation is improving, causing wage growth to align with home price growth, which helps affordability and will help spur more home sales.”
The median existing home price for all housing types increased to $267,300 rising 3.6% from last April’s rate of $257,900. This marks the 86th straight month of year-over-year gains.
Total housing available for sale increased from March, rising from 1.67 million existing homes on the market to 1.83 million in April. This is a 1.7% increase from last year’s total of 1.8 million.
“We see that the inventory totals have steadily improved and will provide more choices for those looking to buy a home,” Yun continued. He notes that sellers have to realize that price growth has moderated. “When placing their home on the market, home sellers need to be very realistic and aware of the current conditions.”
Unsold inventory rests at a 4.2-month supply at the current sales pace, up from last month’s total of 3.8 and up from April 2018’s total of 4 months.
Properties stayed on the market an average of 24 days in April, moving down from 36 days in March and down from 26 days in 2018. The report states that 53% of homes stayed on the market for less than a month.
Yun said student debt continues to hinder Millennial homebuyers.
“Given the record high job openings in the construction sector, some may want to take a gap year to work there and save, and thereby lessen the student debt burden,” he added.
The report shows that the average commitment rate for a 30-year, conventional, fixed-rate mortgage fell from 4.27% the month prior to 4.14% in April and the average commitment rate for all of 2018 was 4.54%, according to Freddie Mac.
“I think the market had a bit of a slow start in the Fall, but Realtors all over the country have been telling me that April was a nice rebound. We’re hopeful and expect that this will continue heading into the summer,” NAR President John Smaby said. “Homes over the last month sold quickly, which is not only a win-win for buyers and sellers, but it’s also great for the real estate industry.”
First-time buyers comprised 32% of sales in April, a decrease from both March and last April’s rate of 33%. NAR revealed that the annual share of first-time buyers held steady at 33%.
Single-family homes declined from a seasonally adjusted annual rate of 4.67 million in March to 4.62 million in April, which is 4% below 4.81 million a year ago. The median existing single-family home price was $269,300 in April, increasing 3.7% from April 2018.
Existing condominium and co-op sales recorded a seasonally adjusted annual rate of 570,000 units in April, rising 5.6% from March, but still down 8.1% from a year ago. The median existing condo price was $251,000 in April, increasing 3.4% from 2018.
Existing home sales in the Northeast retreated 4.5% from last month’s rate to an annual rate of 640,000, which is 4.5% below a year ago. The median price in the Northeast increased 0.9% from April 2018 and came in at $277,700.
In the Midwest, existing-home sales held steady from the prior month at an annual rate of 1.17 million, which is 7.9% below April 2018’s level. The median price in the Midwest was $210,500, increasing 5.5% from this time last year.
Southern existing-home sales fell 0.4% to an annual rate of 2.27 million in April. This is down 1.7% from last year. The median price in the South rose to $236,800, increasing 4.4% from April 2018.
Lastly, existing home sales in the West grew 1.8% to an annual rate of 1.11 million in April, which is a 5.9% below April 2018. The median price in the West was $395,100 increasing 1.3% from this time last year.
“On a seasonally adjusted basis, existing-home sales slipped relative to last month and last year. However, the unadjusted data shows some strength, particularly in the South and Northeast, suggesting that seasonal patterns may be a bit different this year,” Mortgage Bankers Association SVP and Chief Economist Mike Fratantoni said.
“We view it as a positive that inventories continue to increase, although the supply of homes on the market remains relatively tight, and the pace of home-price increases continues to decelerate,” Fratantoni continued. “The strong job market and lower rates should continue to support the potential for more home sales this year.”
