NEW YORK (MainStreet) – This spring has been a great time to sell a home, but not such a fine season for buyers.
According to the National Association of Realtors, existing-home sales dropped 3.3% from March to April, but April sales were still 6.1% higher than they were a year before. Unsold inventory was actually 1% less than it was a year ago, though, with a 5.3-month supply of homes still lagging behind the ideal housing supply of little more than six months. The median price of existing homes of all types in April was $219,400, which is 8.9% higher than it was a year before. Housing prices have been increasing for more than three years, but the jump in prices in April was the highest since a 10.1% uptick in January 2014.
”We know that a combination of low supply and high demand increases prices,” says Curt VanderZanden, a loan officer with Mortgage Express in Portland, Ore. “That, of course, is just one reason values in all states rose at a healthy pace last year.”
In this climate, 2.2 million existing homes just aren't enough. Houses sold faster in April (at an average of 39 days after listing) than at any time since July 2013 (42 days) and the second shortest time (37 days in June 2013) since NAR began tracking in May 2011.
"Housing inventory declined from last year, and supply in many markets is very tight, which in turn is leading to bidding wars, faster price growth and properties selling at a quicker pace," says Lawrence Yun, chief economist for NAR. "To put it in perspective, roughly 40% of properties sold [in April] went at or above asking price, the highest since NAR began tracking this monthly data in December 2012."
Depending on where buyers are looking, that supply may be healthier than it looks. Distressed sales — which included foreclosures and short sales — made up just 10% of sales in April. That's down from 15% percent share a year ago and, according to real estate data firm RealtyTrac, that's in line with national foreclosure numbers from earlier this year that were the lowest the nation has seen since July 2006.
“Given that August 2006 was the peak of the housing bubble, this eight-and-a-half year low in foreclosure activity is a significant milestone and a sign that nationwide foreclosure activity is on track to return to historic norms this year — and is possibly even headed below historic norms given the skinny-jeans-tight lending standards over the past five years,” said Daren Blomquist, vice president at RealtyTrac. “In markets where foreclosures were processed more efficiently we are seeing foreclosure numbers now below pre-crisis levels in some cases. Conversely, the cleanup of deferred distress is continuing in markets where a logjam of in-limbo foreclosures is still lingering from the housing crisis — as evidenced by rebounding foreclosure activity in those markets.”
Roughly two dozen states have seen an uptick in overall foreclosure activity. Nevada, Massachusetts and Texas are among states that have seen an increase in homes entering the foreclosure process. Meanwhile, New York, New Jersey and Washington are among states that saw an uptick in foreclosure auctions earlier this year.
Meanwhile, homebuilders and new homes are starting to make a comeback. The National Association of Homebuilders notes that May's 733,000 new housing starts are up 16.9% from a year earlier. Meanwhile, the Census Bureau and Department of Housing and Urban Development noted that the sale of new single-family homes increased a whopping 26% from a year earlier. But a low 4.8-month supply (down from a 6.1-month stockpile in July) has kept average sale prices fairly lofty at $341,000. With the economy recovering, the employment picture looking brighter and Freddie Mac's average interest rate for a 30-year fixed-rate mortgage still below 4%, there's plenty of incentive to go out house hunting. Until more of those new homes are built or more foreclosures hit the market, however, the housing market will be tilted toward the sellers.
"April's setback is the result of lagging supply relative to demand and the upward pressure it's putting on prices," NAR's Yun says. "However, the overall data and feedback we're hearing from Realtors continues to point to elevated levels of buying interest compared to a year ago. With low interest rates and job growth, more buyers will be encouraged to enter the market unless prices accelerate even higher in relation to incomes."
— Written by Jason Notte in Portland, Ore.
To follow the writer on Twitter, go to http://twitter.com/notteham.