REALTOR® Magazine-Daily News-Existing-Home Sales Rise to Record in April

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Daily Real Estate News | May 24, 2005 | Existing-Home Sales Rise to Record in April Existing-home sales hit a record high in April, defying expectations of a modest slowing trend in 2005, according to the NATIONAL ASSOCIATION OF REALTORS®. Single-family home sales rose 4.5 percent in April to a record seasonally adjusted annual rate of 6.28 million from a level of 6.01 million in March. Last month’s sales activity was 5.0 percent above the 5.98 million-unit pace in April 2004. The median single-family home price was $203,800 in April, up 15.1 percent from a year earlier. Total existing-home sales—including single-family, townhomes, condominiums, and co-ops—rose 4.5 percent in April to a seasonally adjusted annual rate* of 7.18 million from a downwardly revised pace of 6.87 million in March. April sales were 5.7 percent above the 6.79 million-unit pace in April 2004. The previous record was a sales rate of 7.02 million in June 2004. David Lereah, NAR’s chief economist, says sales had been expected to hold at high levels. “A new record is a bit unexpected, but so is the performance of mortgage interest rates, which have been lower than forecast,” he says. “When we look at recent job gains, we see all the positive factors coming together to coincide with a powerful demographic demand for housing.” According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.86 percent in April, down from 5.93 percent in March; the rate was 5.83 percent in April 2004. Last week, the 30-year fixed dropped to 5.71 percent. NAR President Al Mansell, CEO of Coldwell Banker Residential Brokerage in Salt Lake City, says home prices have accelerated. “We’ve been facing a significant shortage of homes available for sale,” he says. “Although housing supplies rose last month, it wasn’t enough to take pressure off of prices gains, which are the strongest we’ve seen in nearly 25 years. The dynamics of the market underscore the value of housing as a solid long-term investment.” The national median existing-home price for all housing types was $206,000 in April, up 15.1 percent from April 2004 when the median price was $179,000. The median is a typical market price where half of the homes sold for more and half sold for less. The last time prices rose at a stronger pace was in November 1980 when the median price rose 15.6 percent from a year earlier. Total housing inventory levels rose 5.0 percent at the end of April to 2.48 million existing homes available for sale, which represents a 4.2-month supply at the current sales pace. Existing condominium and cooperative housing sales also hit a record, increasing 4.8 percent to a seasonally adjusted annual rate of 899,000 units in April from a level of 858,000 units in March. Last month’s sales activity was 10.7 percent above the 812,000-unit pace in April 2004. The median condo price was $223,600, up 18.4 percent from the same month a year ago. Condo sales last month accounted for 12.5 percent of market activity. Single-family home sales rose 4.5 percent in April to a record seasonally adjusted annual rate of 6.28 million from a level of 6.01 million in March. Last month’s sales activity was 5.0 percent above the 5.98 million-unit pace in April 2004. The median single-family home price was $203,800 in April, up 15.1 percent from a year earlier. Regionally, the home resale pace in the South jumped 7.4 percent from March to a record annual rate of 2.74 million units in April, and was 8.3 percent higher than a year ago. The median price of an existing home in the South was $176,000, which was 8.0 percent higher than April 2004. Total existing-home sales in the Midwest rose 5.8 percent to a record annual rate of 1.64 million in April, and were 3.8 percent above April 2004. The median price in the Midwest was $166,000, up 12.9 percent from a year earlier. Existing-home sales in the Northeast increased 4.3 percent to a record annual pace of 1.20 million units in April, and were 7.1 percent above the level of a year ago. The median existing-home price in the Northeast was $243,000, up 15.2 percent from April 2004. Existing-home sales in the West held even at an annual rate of 1.61 million units in April, and were 2.5 percent higher than April 2004. The median existing-home price in the West was $305,000, up 21.0 percent from the same month a year ago. * The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns.
Existing-home sales, which include single-family, townhomes, condominiums, and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample—nearly 40 percent of multiple listing service data each month—and typically are not subject to large prior-month revisions.
Existing-home sales for May will be released June 23. The next Pending Home Sales Index will be on June 1 and the forecast will be revised June 8. —NAR