US existing home sales post second straight monthly decline
EXISTING home sales in the US fell for a second straight month in April, with prices rising in roughly half of the country, which together with possibly higher mortgage rates could delay a housing market recovery.
Existing home sales dropped 3.4 per cent to a seasonally adjusted annual rate of 4.28 million units last month, the National Association of Realtors said on Thursday (May 18). Sales fell in all four regions. Economists polled by Reuters had forecast home sales would fall to a rate of 4.30 million units.
Home resale, which account for a big chunk of US housing sales, tumbled 23.2 per cent on a year-on-year basis in April.
The housing market has taken the biggest hit from the Federal Reserve’s fastest monetary policy tightening campaign since the 1980s. The average rate on the popular 30-year fixed mortgage has dropped from a peak of 7.08 per cent in November, which was the highest since 2002. It averaged 6.35 per cent last week, still higher than 5.30 per cent a year ago, according to data from mortgage finance agency Freddie Mac.
Persistently tight housing supply is making it difficult for prospective buyers to wade back into the market to take advantage of the retreat in mortgage rates. Supply is unlikely to improve with many homeowners living longer in their properties, deterred by the still-high mortgage rates.
Shortages of transformers and other building materials have significantly slowed the pace at which new homes are being completed. Tightening credit conditions could also make it harder for builders to finance new projects.
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The median existing house price fell 1.7 per cent from a year earlier to US$388,800 in April. Still, markets in the Northeast and Midwest regions reported price gains.
“Roughly half of the country is experiencing price gains,” said Lawrence Yun, the NAR’s chief economist. “Even in markets with lower prices, primarily the expensive West region, multiple-offer situations have returned in the spring buying season following the calmer winter market.”
There were 1.04 million previously owned homes on the market last month, up 1.0 per cent from a year ago.
At April’s sales pace, it would take 2.9 months to exhaust the current inventory of existing homes, up from 2.2 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand.
Properties typically remained on the market for 22 days in April, down from 29 days in March. Seventy-three per cent of homes sold last month were on the market for less than a month. First-time buyers accounted for 29 per cent of sales, up from 28 per cent a year ago.
All-cash sales made up 28 per cent of transactions, compared to 26 per cent a year ago. Distressed sales, including foreclosures, represented only 1 per cent of transactions, unchanged from March and the prior year. REUTERS
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