Tim Loehrke
USA Today
The median price of homes sold in April rose to $223,000, an increase of 4.2% from April 2005.
WASHINGTON (AP) — Sales of existing homes fell in April, and the price posted the smallest increase in 4½ years, new signals that the nation’s once red-hot housing market has cooled.
The National Association of Realtors said Thursday that sales of previously owned single-family homes and condominiums dropped 2% last month to a seasonally adjusted sales pace of 6.76 million units.
The median price of homes sold in April rose to $223,000, an increase of 4.2% from April 2005. That represented the smallest year-over-year price gain since September 2001. The price was up $5,000 from March.
Prices in the Midwest actually fell 1.2% in the April to April period, a fact that Lereah attributed to weak job growth and a rising inventory of unsold homes.
The price increase in April is far below the double-digit price gains that home sellers enjoyed last year. Sales of both new and existing homes set records for five straight years as the housing industry enjoyed a boom powered by the lowest mortgage rates in more than four decades.
However, rates have been rising this year, with 30-year mortgages now at 6.6%, the highest level in nearly four year.
David Lereah, chief economist for the Realtors, said he expects the 30-year mortgage would keep rising and would be near 7% by the end of the year. He said that is consistent with his view that the country is heading for a soft landing in housing but not a crash.
Other economists worry that with a large overhang of unsold homes and rising mortgage rates, the industry could be facing a more severe outcome.
For April, the total number of unsold homes hit a record of 3.38 million units, which represented a six-month supply at the April sales pace. The time period needeed to exhaust the current supply was the highest since January 1998.
By region, sales fell 3.7% in the Midwest, 1.9% in the South, 1.4% in the West and 0.8% in the Northeast.
Lereah said the data the Realtors are collecting indicate the housing industry is still experiencing a split personality with once hot markets in Florida, California and Arizona slowing down while some housing markets that had been lagging behind the front-runners are starting to take off.
He said the hot markets were in Texas, North Carolina, South Carolina, Ohio, Georgia, Utah and New Mexico.
“This is a tale of two markets. Half of the country is heating up and half the country is cooling off,” Lereah said.
Lereah called the current period a “delicate juncture” for housing with the inventory of unsold homes being the critical indicator going forward. If that figure gets too high, analysts worry, it will put downward pressure on prices.
For now, analysts are forecasting that prices will rise around 6% this year while sales drop around 10%.
For April, sales of single family homes dropped 2% to an annual rate of 5.92 million units while sales of condominiums fell 2.7% to an annual rate of 839,000 units.
The sales price for condominiums fell 0.2%, the first year-over-year price drop since the spring of 1995.