From the Washington Post:
Sales of previously owned homes dropped in April, falling short of many analysts’ expectations for this key month of the spring selling season.
But the number of households that fell seriously behind on mortgages in the first quarter is down, suggesting a smoother path ahead, if only the housing market could shed the foreclosures that continue to drag down home prices.
The findings come from two industry reports released Thursday, both of which signaled a slow housing recovery. Even though mortgage defaults are shrinking, the homes in foreclosure remain at an alarmingly high level, and a meaningful pickup in sales is needed to purge them.
Existing sales dropped 0.8 percent to a seasonally adjusted rate of 5.05 million in April from March, the National Association of Realtors reported. They were down 13 percent from a year earlier, when a federal home-buyer tax credit ignited a buying frenzy.
The Realtors group blamed the sluggish activity on unnecessarily tight lending standards. Low home appraisals also botched many potential sales, the group said.
Some economists expected sales to rise in part because the Federal Housing Administration, which backs low down-payment loans, raised its fees in mid-April. They thought buyers would rush to close on homes ahead of the increase, said Patrick Newport, an economist at IHS Global Insight. Going forward, the higher fees will hurt demand, he said.
Fewer Americans purchased previously occupied homes in April, a troubling sign that the weak housing market remains a drag on the economy.
Sales fell 0.8 percent in April to a seasonally adjusted annual rate of 5.05 million units, the National Association of Realtors said Thursday. That’s far below the 6 million homes a year that economists say represents a healthy market.
Purchases made by first-time homebuyers did increase but not nearly enough to signal a housing recovery is on the way. First-time buyers are critical because they typically improve their properties and invest in their communities, a combination that helps home values rise.
Foreclosures, on the other hand, force prices down. They represented more than a third of all sales in April and more are expected in the months ahead.
Since the housing boom went bust, sales have fallen in four of the past five years and hit a 13-year low last year. Declining home prices and low mortgage rates haven’t been enough to boost sales this year.
Some who want to buy can’t, mostly because banks have tightened lending requirements and are insisting on larger down payments. Many buyers who can qualify for loans are holding off. They are worried that home prices have yet to bottom out.
Economists say it could be years before the housing market fully recovers.