May 20, 2011 (Shirley Allen)
Existing home sales continued its ride along the bottom of the housing barrel as completed transactions declined 0.8 percent in April, 2011, compared to March according to the National Association of Realtors (NAR). Although the market has managed six gains in the last nine months, Lawrenece Yun, chief economist of NAR, says the market is “underperforming” especially considering this is generally the time of year sales are suppose to be gaining momentum and declining home prices and historically low mortgage interest rates have now made home buying highly affordable.
“Given the great affordability conditions, job creation and pent-up demand, home sales should be stronger,” he said. “Although existing-home sales are expected to trend up unevenly through next year, unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations.”
A parallel survey conducted by NAR shows that 11 percent of Realtors reported that a contract had been cancelled in April due to an appraisal coming in below the negotiated price between a buyer and a seller. Ten percent of the appraisals reportedly delayed a contract and 14 percent required a contract to be negotiated to a lower sales price.
Existing home sales, which includes single-family homes, condominiums, and co-ops, sold at a seasonally adjusted rate of 5.05 million homes in April, down from a revised 5.09 million homes in March, and down from 5.8 million in April 2010.
NAR also reports that all-cash transactions stood at 31 percent, down from a record high of 35 percent in March. Investors account for the bulk of cash purchases. First time home buyers purchased 36 percent of the homes for sale, up from 33 percent in March. Investors stayed busy by capturing 20 percent of existing homes sales in April, which was down from 22 percent in March.
Distressed home sales continued to influence home prices as the national median home price was $163,700 with distressed properties typically being sold at about a 20 percent discount. Distressed home sales accounted for 37 percent of sales in April, down from 40 percent in March.
Housing inventories increased in April to 3.87 million existing homes available for sale. Based on current sales trends, that translates into a 9.2 month supply of homes.
Regionally, existing-home sales in the Northeast fell 7.5 percent to an annual pace of 740,000 in April and are 32.1 percent below a year-ago surge and in the Midwest existing-home sales rose 5.7 percent in April to a level of 1.12 million but are 16.4 percent below a cyclical peak in April 2010.
In the South, existing-home sales declined 1.0 percent to an annual pace of 1.95 million in April and are 9.3 percent below a year ago, while in the West, existing home sales slipped 1.6 percent to an annual level of 1.24 million in April and are 0.8 percent below April 2010.
The median price in the Northeast was $225,400, which is 7.3 percent below April 2010, while in the Midwest, the median price was $133,200, down 5.1 percent from a year ago.
The median price in the South was $142,800, which is 4.1 percent lower than April 2010 and in the West, the median price was $203,400, down 6.1 percent from a year ago.
Tags: NAR, existing home sales, underperforming market, affordable conditions, low mortgage rates, declining prices, low appraisals, cancelled contracts, median home price