By Jeff Bater
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)–Existing-home sales climbed modestly in April as buyers took advantage of foreclosures and snatched up property carrying discounted price tags.
Home resales rose by 2.9% to a 4.68 million annual rate from 4.55 million in March, the National Association of Realtors said Wednesday. The NAR originally reported March sales fell 3.0% to 4.57 million.
The April resales level of 4.68 million reported Wednesday by NAR was above Wall Street expectations of a 4.67 million sales rate for previously owned homes.
About 45% of the 4.68 million in April sales were foreclosures and short sales. The large number of these distressed property sales has driven prices lower, year over year. The median price for an existing home last month was $170,200, down 15.4% from $201,300 in April 2008.
“Most of the sales are taking place in lower price ranges and activity is beginning to pick up in the mid-price ranges, but high-end home sales remain sluggish,” NAR economist Lawrence Yun said.
Lower prices, combined with historically low borrowing costs, have increased affordability. The average 30-year mortgage rate was 4.81% in April, down from 5.00% in March, Freddie Mac (FRE) data show. Realtors also hope demand is stirred by the $8,000 tax credit for first-time home buyers included in the Obama administration’s economic stimulus package.
A decline in price is troubling because it can give pause to would-be buyers, hesitant in hope for a better deal. On a bright note, the median price, on a monthly basis, has climbed three months in a row. It was $169,900 in March, a downward revision from an originally reported $175,200.
Working against sales are tighter mortgage lending standards, which have made it harder to finance a purchase. And the uncertain economic outlook is also hurting the existing-home market. The unemployment rate rose to 8.9% in April from 8.5%.
Previously owned home sales, year over year, were down 3.5% from the pace in April 2008, Thursday’s report said.
Weak demand has kept inventories of unsold homes high. Inventories of previously owned homes jumped 8.8% at the end of April to 3.97 million available for sale. That represented a 10.2-month supply at the current sales pace, compared to 9.6 in March. Bloated inventories, in turn, are depressing prices.
Regionally, sales in April compared to March rose 11.6% in the Northeast, 1.8% in the South, and 3.5% in the West. Sales dropped 2.0% in the Midwest.
-By Jeff Bater, Dow Jones Newswires; 202-862-9249; email@example.com
By Jeff Bater