Sales of previously-owned homes ticked up by less than forecast during April, while home values accelerated further putting prices out of reach of the decreasing number of first-time buyers. Sales in April rose by 1.3% to an annualized pace of 4.65 million homes. As we saw with housing starts in recent data, the increase in sales this time was concentrated in a 7.3% gain in sales of condos and coop units. That is the smaller segment and accounts for one-in-eight of overall existing home sales.
Existing home sales topped out in June 2013 and have largely declined since, which matches a spike in mortgage costs during the summer as discussion emerged on the potential onset of tapering at the Fed. While that process was deferred until December, the impact on housing activity is quite apparent.
So the silver lining out of today’s report is that, while activity nudged higher, activity should increase over the coming months in response to a decline in mortgage borrowing costs during recent months.
The inevitable caveat is that prices moved further away from first-time buyers, who accounted for 29% of overall sales and down by 1% since March. First-time buyers account for the same proportion of sales as they did one year ago. The NAR has in the past indicated that the market is likely to gain traction when this class of home buyer accounts for between 35%-40% of monthly sales.
Median prices rose by $5,000 to $201,700 while average prices jumped $4,800 to 250,600. Single family homes in either case cost more than condos. Overall, median home prices are 5.2% above year ago levels and are running at more than two-times the pace of inflation.
Single family home sales barely budged.