Existing home sales highest in almost three-and-a-half years
Home resales rose in April to the highest level in nearly 3-1/2 years, which should support the housing sector and the overall economic recovery.
The National Association of Realtors said on Wednesday existing home sales advanced 0.6 percent to an annual rate of 4.97 million units, the highest level since November 2009. The increase, however, was below expectations for a rise to a 4.99 million-unit rate last month.
Compared to April last year, home resales were up 9.7 percent.
Tight supplies in some parts of the country are slowing down the pace of sales, but sellers are starting to wade back into the market, attracted by rising house prices.
The housing market is one of the bright spots in the economy, which has been hit by higher taxes and deep government budget cuts.
While manufacturing has come under pressure from tighter fiscal policy, particularly $850 billion in across-the-board government spending cuts, consumer spending is getting support from firming house prices and steady gains in employment.
That should limit the degree to which the economy slows this quarter after it expanded at a 2.5 percent annual pace in the first three months of the year.
In April, the median home sales price increased 11 percent from a year ago to $192,800, the highest level since August 2008. With prices rising, more sellers put their properties on the market, lifting the inventory of homes 11.9 percent from March to 2.16 million.
That represented a 5.2 months' supply at April's sales pace, up from 4.7 months in March. Still, it remained below the 6.0 months that is normally considered as a healthy balance between supply and demand.
A very accommodative monetary policy by the Federal Reserve, which has held mortgage rates near record lows, is helping to lift the housing market.
Adding to signs that the housing market recovery was establishing itself, distressed properties - which previously weighed on prices because they typically sold at deep discounts - accounted for only 18 percent of overall sales last month.
That was the lowest since the Realtors group started tracking the series in October 2008. These properties, foreclosures and short sales, had made up 21 percent of sales in March.
Also underscoring the firming housing market tone, properties are selling fast. The median time on market for homes was 46 days in April, down from 62 days the prior month.
About 44 percent of all homes sold in April had been on the market for less than a month, while only 8 percent had been for a year and longer.
Last month, first-time buyers accounted for 29 percent of the transactions, with investors buying 19 percent of homes. Investors, both individuals and institutional firms, are mostly buying homes for renting.