Strapped inventory and elevated prices haven’t kept winter’s hibernating buyers from breaking into the spring 2016 seller’s market.
April’s existing-home sales held onto their momentum for the second month in a row, according to a recent report by the National Association of Realtors. Sales surged in the Midwest and also experienced a significant increase in the Northeast.
Taking into account single-family homes, townhomes, condos and co-ops, existing-home sales grew 1.7 percent to a seasonally adjusted annual rate of 5.45 million, compared to an upwardly revised 5.36 million in March.
Source: National Association of Realtors
In addition, total housing inventory rose by 9.2 percent to 2.14 million. While this demonstrates progress, the number of available homes for sale remains 3.6 percent lower than it did in April 2015 (2.22 million).
“Primarily driven by a convincing jump in the Midwest, where home prices are most affordable, sales activity overall was at a healthy pace last month as very low mortgage rates and modest seasonal inventory gains encouraged more households to search for and close on a home,” said Lawrence Yun, NAR chief economist, in a press release. “Except for in the West – where supply shortages and stark price growth are hampering buyers the most — sales are meaningfully higher than a year ago in much of the country.”
With the median existing-home price across housing categories rising to $232,500 in April, an increase of 6.3 percent from the same time last year, the market is also experiencing its 50th consecutive month of year-over-year price gains.
On average, properties stayed on the market for 39 days during the month of April, a number that’s level with days-on-market one year ago, and down from 47 days in March. Nearly half (45 percent) of homes were on the market for less than a month in April — the fastest turnaround the market has experienced since June 2015.
“The temporary relief from mortgage rates currently near three-year lows has helped preserve housing affordability this spring, but there’s growing concern a number of buyers will be unable to find homes at affordable prices if wages don’t rise and price growth doesn’t slow,” Yun added.
Regional views
Here’s how existing-home sales fared across different parts of the country:
Northeast
- Home sales up 2.8 percent to an annual rate of 740,000 (17.5 percent above a year ago)
- Median home price: $263,600 (4.1 percent above April 2015)
Midwest
- Home sales spiked 12.1 percent to an annual rate of 1.39 million (12.1 percent above April 2015)
- Median home price: $184,200 (up 7.7 percent from a year ago)
South
- Home sales decline 2.7 percent to an annual rate of 2.19 million (4.3 percent above April 2015)
- Median home price: $202,800 (up 6.5 percent from a year ago)
West
- Home sales decreased 1.7 percent to an annual rate of 1.13 million (3.4 percent lower than a year ago)
- Median home price: $335,000 (6.5 percent above April 2015)
Help for first-time condo buyers
Last week, U.S. Housing and Urban Development Secretary Julian Castro spoke at the 2016 Realtors Legislative Meetings & Trade Expo. He announced the forward movement of modifications to FHA condo rules (which are currently at the Office of Management and Budget for review) in an effort to assist first-time buyers, including changes that would “address a lengthy and complex recertification process, owner-occupancy requirements, and limits on the types of property insurance that FHA considers acceptable coverage.”
“Secretary Castro’s update that the condo rule changes are in their final stages before implementation received great applause from Realtors both at the forum and throughout the country,” said NAR President Tom Salomone. “To ensure that purchasing a condo increasingly becomes a viable and affordable option for first-time buyers, NAR supports the ongoing efforts to eliminate unnecessary barriers holding back condo sales.
“We hope that progress on this condo rule means we’ll see some much-needed changes in the near future.”