Existing home sales rose last month, offering further evidence that the U.S. housing market is on track for a slow and bumpy recovery.
In April, existing home sales were up 3.4% from March to a seasonally adjusted annual rate of 4.6 million, the National Association of Realtors reported Tuesday. They rose 10% from a year ago.
Sales were higher in all four regions of the U.S. "April's numbers reassure us that this market is still on the mend," says IHS Global Insight economist Patrick Newport.
The NAR data show distressed sales were 28% of April's total, down from 37% a year ago. Fewer distressed home sales, which include foreclosures and short sales, helps values. Distressed homes sold at a 14% to 21% discount in April, vs. non-distressed home sales, NAR says.
The inventory of homes for sale has also shrunk year-over-year. Nationwide, the number of homes listed for sale in April was down 21% from a year ago, the NAR says.
Meanwhile, demand is up, given job growth and a strengthening economy, says Jed Kolko, economist for real estate website Trulia.
"There's more buyers, but they're chasing fewer homes on the market," Kolko says.
In some areas of the country, the inventory of homes for sale is particularly tight, including: Washington, D.C.; Miami and Naples, Fla.; Phoenix; Orange County, Calif.; and Seattle, the NAR says.
"We expect stronger price increases in most of these areas," says Lawrence Yun, NAR chief economist.
Some of those markets have seen inventories shrink more than the national average.
Southern California had 41% fewer homes for sale in April than a year ago, says Steven Thomas, who tracks the market for ReportsOnHousing.com. "Multiple offers are now the norm," he adds.
Investors and foreign buyers have helped reduce Phoenix's housing inventory to its lowest level in more than six years, says John Burns Real Estate Consulting.
Multiple offers are also the norm for homes in the east side of Seattle, including Bellevue, Wash., says Coldwell Banker Bain Realtor Anthony Gilbert. The competition for homes has heated up so fast that some buyers have been surprised, he says.
This week, he had a client who was shocked to find out that her offer was one of six on a home.
As the market continues to improve, Gilbert expects more sellers to put homes on the market. Now, many sellers are waiting for better prices, he says.
The NAR's data show median existing home prices in April up 10% from a year ago. The NAR's data doesn't adjust for the mix of homes sold, so a spate of more expensive home sales or fewer distressed home sales can skew results.
Trulia data shows that homes listed for sale in the February, March and April time period were, on average, 6.2% larger this year than last, suggesting that higher-price homes may be making up more of the market.
While home sales are up from last year, they're coming off one of the worst years ever. IHS expects home sales to climb 10% this year vs. last year. Tight credit, which makes mortgages hard to get, is a key obstacle to a "strong recovery," IHS says.
There are also plenty of distressed homes still in the market. Nationwide, 3.6 million homes in April were 90 or more days delinquent on a mortgage payment or were already in foreclosure, say data from mortgage tracker Lender Processing Services.
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