Existing home sales, prices rise in April
(MoneyWatch) It seems the housing market could be on its way to a real recovery. Home sales rose annually in April, according to a report released Tuesday by the National Association of Realtors (NAR). Prices also continued their upward trend, further evidence the housing market could be starting to normalize.
Total existing-home sales -- completed transactions of single family homes, townhomes, condos and co-ops -- rose nationally to a seasonally-adjusted annual rate of 4.62 million in April, a 3.4 percent increase from the previous month. Annually, existing home sales rose 10 percent.
The national median existing-home prices also increased in April, up 10.1 percent from the previous year to $177,400. That's the second consecutive month of increases since June and July of 2010, according to NAR. Those gains were both less than one percent.
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Lawrence Yun, NAR chief economist, said in a press release he believes this proves a recovery is underway. "It is no longer just the investors who are taking advantage of high affordability conditions. A return of normal home buying for occupancy is helping sales across all price points, and now the recovery appears to be extending to home prices."
First-time homebuyers are doing their part to contribute to the recovery, accounting for 35 percent of purchasers in April. That's up from 33 percent in March, and relatively flat from April 2011 when first-time buyers accounted for 36 percent.
"The general downtrend in both listed and shadow inventory has shifted from a buyers' market to one that is much more balanced, but in some areas it has become a seller's market. A diminishing share of foreclosed property sales is helping home values," Yun said in the press release. "Moreover, an acute shortage of inventory in certain markets is leading to multiple biddings and escalating price conditions."
Some of the areas with tight supply include the Washington, D.C. area; Miami and Naples, Fla.; North Dakota; Phoenix, Ariz.; Orange County, Calif. and Seattle, Wash.
Yun predicts prices nationally will rise from one to two percent in 2012, with prices moving even higher in markets with limited inventory. He expects price gains to be stronger in 2013.
One of the key elements of a real housing recovery is unloading all the distressed property -- foreclosures and short sales sold at deep discounts -- on the market and dragging home prices down. These distressed homes accounted for 28 percent of April sales. That's down slightly from March's total of 29 percent, and a significant decrease from April 2011 when distressed sales accounted for 37 percent of all home sales.
More good news: The gap between short sales and foreclosures closed further, showing once again that lenders are getting serious about allowing short sales in lieu of foreclosures. Of the distressed homes sold in April, 17 percent were foreclosures and 11 percent were short sales.
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Since short sales typically do less damage to the surrounding market than foreclosures, it's good to see that gap closing. In April, foreclosures sold for an average of 21 percent below market value, while short sales were discounted 14 percent.
It's clear we're not out of the woods yet, but it looks like the market is beginning to recover. The combination of rising home prices, falling inventory and fewer foreclosures could finally push the market over the hump.
