Sales of previously owned homes fell back 0.8 percent in April, according to a new report from the National Association of Realtors (NAR).
The share of distressed homes – bank-owned properties and pre-foreclosure short sales — also dropped last month, accounting for 37 percent of total sales volume, down from 40 percent in March and an average of 39 percent over the first quarter.The trade group says an uneven recovery should be expected and notes that existing-home sales have risen in six of the last nine months.
The April decline brought the annual sales pace for pre-owned homes down to 5.05 million, compared to 5.09 million in March.
Existing-home sales are 12.9 percent below the 5.80 million pace recorded in April 2010, but NAR pointed out that sales surged during April and May of last year in response to the homebuyer tax credit, which skews the year-over-year comparison.
Still, Lawrence Yun, NAR’s chief economist, says the market is underperforming.
“Given the great affordability conditions, job creation, and pent-up demand, home sales should be stronger,” he said.
Realtors in the field say April’s existing-home sales numbers are being impacted by appraisal issues.
A parallel NAR practitioner survey shows 11 percent of Realtors report a contract was cancelled last month because the appraisal came in below the price negotiated between buyer and seller. Ten percent had a contract delayed and 14 percent said a contract was renegotiated to a lower sales price as a result of a low appraisal.
“[E]xisting guidelines from Freddie Mac and Fannie Mae must be fully implemented so all appraisals are done by valuators with local expertise,” said Ron Phipps, president of NAR.
Yun says tight credit is also restraining the market. “Although sales are clearly up from the cyclical lows of last summer, home sales are being held back 15 to 20 percent due to the very restrictive loan underwriting standards,” he said.
According to NAR’s latest report, all-cash transactions stood at 31 percent in April, down from a record level of 35 percent in March. They were 26 percent in March 2010. Investors account for the bulk of cash purchases.
The trade group’s study shows that the national median existing-home price for all housing types was $163,700 in April, up from $159,600 in March – likely the result of fewer distressed property transactions.
“Home values, despite month-to-month volatility, have been remarkably stable in the range of $160,000 to $170,000 for the past three years,” Yun said. “Stable home prices in turn will steadily lower loan default rates, including strategic defaults.”
Total housing inventory at the end of April increased 9.9 percent to 3.87 million existing homes available for sale, which represents a 9.2-month supply at the current sales pace. That’s up from an 8.3-month supply in March.
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