On Thursday the Census Bureau and the Department of Housing and Urban Development
released figures for new
home sales in April that showed a big increase in sales and a drop in both
median and average home sale prices. Media coverage has speculated that the
both outcomes were a result of price cuts by builders in an attempt to get product
moving and inventories reduced.
On Friday the National Association of Realtors released its report on
the April sales of existing homes. The data showed a 2.6 percent
drop in the seasonally adjusted sales rate of single-family homes, townhouses,
condominiums, and co-ops from upwardly-revised March levels.
Total existing home sales were at a seasonally adjusted annual rate of 5.99
million units in April compared to 6.5 million in March. The sales pace is 10.7
percent lower than the 6.71 million units sold in April 2006.
Lawrence Yun is NAR's new senior economist, replacing long-time
NAR officer David Lereah who left NAR to head an unspecified major project at
MOVE.com, the company that owns www.Realtor.com. Speaking about the report Yun
said that he isn't surprised. "We've been anticipating slower home sales because
many subprime loan products are no longer available. In addition, increased
scrutiny by lenders is stopping risky mortgage origination, which is good for
both consumers and the lending community. Fortunately, a wide availability of
conventional mortgage products and the 4.5 million jobs created over the past
24 months will help to stabilize the market going forward."
NAR President Pat V. Combs said historically low mortgage interest rates continue
to support the housing market. "Long-term financing remains favorable,
but interest rates are rising," she said. "Although some buyers
have a wait-and-see attitude regarding home prices, they should consider that
rising interest rates later this year could offset a lower sales price when
you get down to the monthly payments.
The inventory of existing houses on the market is much higher
than that for new homes. There is a 6.0 month supply of new homes available
but at the present absorption rate it would take 8.4 months to eliminate the
current backlog of existing homes. Last month the inventory was estimated at
a 7.4 months supply.
NAR ignores month-to-month changes in sales prices, preferring to focus on
year-over-year figures because of the seasonality in buying patterns. "Month-to-month
comparisons do not compensate for seasonal changes," the report states,
"especially for the timing of family buying patterns. Changes in the geographic
composition of sales can distort median price data."
According to NAR the national median existing-home price for
all housing types was $220,900 in April, down 0.8 percent from April 2006 when
the median was $222,600. The report noted, however, that there is a downward
skew in the current national comparison because sales have shifted away from
many high-cost areas during the last year.
Sales slipped in every region and prices in all but the Midwest.
Sales in the Midwest were down 0.7 percent in April to a level of 1.38 million,
and are 11.5 percent below a year ago. The median price in the Midwest was $166,600,
1.9 percent higher than in April 2006.
The South dropped 1.2 percent to an annual rate of 2.38 million units in April,
8.8 percent below a year earlier. The median price was $181,100, down 0.3 percent
from a year ago.
Sales in the West declined 1.7 percent to 1.19 million, 15.6 percent lower
than a year ago. The median price in the West was $338,200, which is 2.1 percent
lower than April 2006.
Existing-home sales in the Northeast fell 8.8 percent to a level of 1.04 million
in April, and are 8.8 percent lower than April 2006. The median existing-home
price in the Northeast was $283,600, which is 0.6 percent below a year ago.
Figures for single family homes did not differ substantially from the data
for all homes. If you wish to view the entire report you can do so at www.realator.org.