Sales of existing U.S. homes rose in April, driven by broad-based gains in demand that signal the market is stabilizing.
Purchases, tabulated when a contract closes, increased 3.4 percent to a 4.62 million annual rate, figures from the National Association of Realtors showed today in Washington. The median price jumped by the most in six years.
“We are making incremental progress,” said Millan Mulraine, a senior U.S. strategist at TD Securities Inc. in New York, who correctly forecast the sales pace. “People are becoming more confident about job prospects and about taking on mortgages. This is all positive for the economy.”
The April sales pace was in line with the 4.61 million median forecast in a Bloomberg News survey. Estimates of the 73 economists ranged from 4.47 million to 4.8 million. The prior month’s pace was revised to 4.47 million, from a previously reported 4.48 million. April’s total was just shy of the 4.63 million reached in January that was the highest in almost two years.
The median price of an existing home climbed 10 percent to $177,400 from $161,100 in April 2011, today’s report showed. It was the biggest year-to-year gain since January 2006 and reflected a seasonal mix in demand toward bigger houses and fewer distressed sales, Yun said.
Families return to the market at this time before the start of a new school year, pushing up demand, he said. Cash transactions, distressed properties and investors accounted for a smaller share of all purchases last month, he said.
Purchases improved in all four regions, led by a 5.1 percent gain in the Northeast.
The median price of an existing home that sold in April of this year was $177,400, an increase of just over ten percent from a year ago. That is the biggest price jump since January of 2006. The difference between now and then, though, is the 2006 price jump was real, this latest spike is not.
The share of home sales in the $0-250,000 price range made up over 73 percent of all sales in February; that has already dropped to 67 percent in April.
If you look at sales by price category, you see the most startling evidence of this shift in what’s selling on the low end out west. Sales of homes $0-100,000 dropped over 26 percent out west in April, but rose 21 percent in the $250-500,000 price range. The national numbers tell the same story.
So what does this say about where we really are in terms of home prices nationally? The Realtors still expect overall home prices to rise just 2-3 percent in 2012, which is one of the more bullish predictions. If the banks start releasing more properties onto the market or push more delinquent loans to foreclosure, overall home prices will come down again.