Home Sales Tick Down in April

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The pace of existing home sales – closed sales – SLIPPED 0.4 percent, 20,000, in April to a seasonally adjusted annual sales rate of 5.19 million;
  • Median price of an existing single-family home ROSE 2.9 percent, $9,400, to $267,300;
  • Year-year the median price is up 3.6 percent or $9,400;
  • Number of homes available for sale ROSE 160,000 or 9.6 percent to 1.83 million;
  • The months’ supply of homes for sale in January JUMPED 0.4 months to 4.2 months.

Trends:

  • The pace pf existing home sales has FALLEN in three of the four reporting months this year and 11 of the last 13 month;
  • Year-year sales were DOWN 4.8 percent, the 14th consecutive month year-year sales have dropped;
  • The median price of an existing single-family home ROSE for the third straight month;
  • The month-month increase in holes for sale – 160,000 – was the largest since April 2018 when inventory also rose 160,000.

Data Source: National Association of Realtors: (NAR)

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The beleaguered home sales market took another hit in April, though a modest one, perhaps more of a glancing blow.

Nonetheless, the slight dip in sales in April marked the continuation of a trend which began a year ago.

The sales slump, despite a drop in mortgage rates, is affecting more than just realtors and mortgage lenders as sales at real estate related retailers are also feeling the slowdown. Sales at furniture and appliance stores, according to the Census Bureau, have fallen 3.1 percent and 3.5 percent respectively in the last year.

The average rate of a 30-year fixed rate mortgage is down from 4.47 percent in April 2018 to 4.14 percent in April 2019.

The roots of the depressed sales are both financial and environmental. Younger potential buyers remain saddled by student loan debt hampering their ability to qualify for a mortgage and have only recently seen a breakthrough from stagnant earnings growth. But as recent residential construction data suggest, there appears to be a shift away from single-family homes in favor of multi-family construction bringing people closer to jobsites to reduce commuting time and the other environmental affects of lengthy travel to work.

At the same time, the memories of the mortgage meltdown a decade ago remain fresh in the minds of potential buyers who may have experienced the impact in their own families or those of friends making them a bit gun-shy of mortgage financing.

The inventory build-up affects the other end of the age spectrum – senior who anticipated using the equity built up in their homes as a retirement nest egg. The median price of an existing single-family home rose 2.9 percent in April, $7,600, to $267,300 — the highest since last August. In the last year, the median price has risen 3.6 percent or $9,400.

One spot of good news in the NAR report was distressed sales – sales of foreclosures – represented three percent of sales as they had a month ago, down from four percent in April 2018.

Sales to first-time homebuyers, the NAR said, represented 32 percent of all transactions in April, down from 33 percent in March and a year ago. In 2010, first-time buyers accounted for 40 percent of existing home sales.

Hear Mark Lieberman every Friday, on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124, at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

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