NAR’s Economist: ‘Not Concerned’ About Latest Dip in Home Sales
May 21, 2019
In the midst of spring selling season, existing-home sales posted a drop for the second consecutive month. But the National Association of REALTORS®’ Chief Economist Lawrence Yun is confident that plenty of signs—like low mortgage rates, a growing job market and wages, and added housing inventories—will help make for a turnaround.
Existing-home sales—completed transactions for single-family homes, townhomes, condos, and co-ops—dropped 0.4% in April compared to March, settling at a seasonally adjusted annual rate of 5.19 million last month, NAR reported on Tuesday. Home sales are down 4.4% from a year ago.
Yun said he is not overly concerned about the slight setback and expects home sales to moderate soon.
“First, we are seeing historically low mortgage rates combined with a pent-up demand to buy, so buyers will look to take advantage of these conditions,” Yun says. “Also, job creation is improving, causing wage growth to align with home price growth, which helps affordability and will help spur more home sales.”
Also, inventory levels are improving, providing more choices to home buyers. Total housing inventory at the end of April rose to 1.83 million, a 1.7% increase from a year ago. Unsold inventory is at a 4.2-month supply at the current sales pace.
“We see that inventory totals have steadily improved, and will provide more choices for those looking to buy a home,” Yun says. Sellers, however, must realize that price growth has moderated, and price accordingly. “When placing their home on the market, home sellers need to be very realistic and aware of current conditions,” Yun added.
Here’s a closer look at NAR’s home sales from April:
- Home prices: The median existing-home price was $267,300, up 3.6% from a year ago.
- Days on the market: Properties remained on the market for an average of 24 days, down from 26 days a year ago. Fifty-three percent of homes sold in April were on the market for less than a month.
- All-cash sales: All-cash transactions accounted for 20% of sales in April, down from 21% a year ago. Individual investors make up the biggest bulk of cash sales. They purchased 16% of homes in April, up from 14% a year ago.
- Distressed sales: Foreclosures and short sales represented 3% of sales in April, down from 4% a year ago. One percent of sales were short sales last month.
A closer look at how existing-home sales fared across the country:
- Northeast: Existing-home sales fell 4.5% from the previous month to an annual rate of 640,000 in April, and are 4.5% below a year ago. Median price: $277,700, up 0.9% from a year ago
- Midwest: Existing-home sales held steady last month at a 1.17 million annual rate (about the same as March), but sales were 7.9% below a year ago. Median price: $210,500, up 5.5% from a year ago.
- South: Existing-home sales dropped slightly by 0.4% last month to an annual rate of 2.27 million, down 1.7% from a year ago. Median price: $236,800, up 4.4% from a year ago
- West: Existing-home sales increased 1.8% to an annual rate of 1.11 million in April, 5.9% below a year ago. Median price: $395,100, up 1.3% from a year ago.
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Updated: June 18, 2019