Low supply slows down existing us home sales

Photo credit: Cyndie

Despite properties typically selling faster than at any time since July 2013, resales of homes slowed in April, according to the National Association of Realtors.

Transactions remained above an annual sales pace of 5 million for the second straight month, but all major regions except for the Midwest experienced sales declines in April. Indeed, total existing home sales declined 3.3 per cent following a strong March 2015.

Lawrence Yun, NAR chief economist, attributes the setback to lagging supply levels.

Total housing inventory at the end of April increased 10 per cent to 2.21 million existing homes available for sale, but remained 0.9 per cent below a year ago (2.23 million).

With demand far exceeding supply, properties sold in April faster (39 days) than at any time since July 2013 (42 days) and the second shortest time (37 days in June 2013) since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 180 days in April, while foreclosures sold in 50 days and non–distressed homes took 38 days. Nearly half (46 percent) of homes sold in April were on the market for less than a month.

As a result of this imbalance, the median existing–home price for all housing types in April was $219,400, 8.9 per cent above April 2014 - the 38th consecutive month of year–over–year price gains.

"The [lagging supply is putting] upward pressure on prices," says Yun, which is helping to deter buyers.

"To put it in perspective, roughly 40 per cent of properties sold last month went at or above asking price, the highest since NAR began tracking this monthly data in December 2012," he adds.

"However," he continues, "the overall data and feedback we're hearing from Realtors continues to point to elevated levels of buying interest compared to a year ago. With low interest rates and job growth, more buyers will be encouraged to enter the market unless prices accelerate even higher in relation to incomes."

Indeed, sales have increased year–over–year for seven consecutive months and are still 6.1 per cent above a year ago.