Existing home sales rise 0.6 percent, missing expectations

Existing home sales rose 0.6% to a rate of 4.97 million units in April. This is the highest pace since November 2009. This was slightly below expectations for a 1.4% month-over-month (MoM) rise to a rate of 4.99 million units.

March’s numbers were revised higher to show a 0.2% fall to 4.94 million units. What’s more distressed sales only accounted for 18% of sales, down from 21% in March, and 28% a year ago. A regional breakdown shows that existing home sales rose the most in the South, up 2.0%. In the Midwest they fell 3.4%, in the Northeast they were up 1.6%, and in the West they were up 1.7%.

Housing inventory increased 11.9% to 2.16 million which represents a 5.2 month supply at current sales pace, up from 4.7 months supply in March. The national median existing home price climbed 11% on the year to $192,800. This increased for the 14th straight month.

First time buyers accounted for a smaller share of sales at 29% in April, down from 30% the previous month, and 35% a year ago. All cash sales however accounted for a larger part of existing home sales.

“The robust housing market recovery is occurring in spite of tight access to credit and limited inventory.  Without these frictions, existing-home sales easily would be well above the 5-million unit pace,” said Lawrence Yun NAR chief economist in a press release. 

“Buyer traffic is 31 percent stronger than a year ago, but sales are running only about 10 percent higher.  It’s become quite clear that the only way to tame price growth to a manageable, healthy pace is higher levels of new home construction.”

Existing home sales account for a larger share of the market than new homes, and have outpaced new home sales. And with housing supply staying tight, a rise in existing sales should support home prices.