Exsting Home Sales, Prices Move Upward

Existing home sales rose slightly in April, driven by bargain hunters taking advantages of foreclosures, short sales and near-record low interest rates.

Sales of all categories of existing homes, including single-family, condos and co-ops, rose 2.9 percent for the month, according to seasonally adjusted figures released today by the National Association of Realtors (NAR). The increase was strongest in the northeastern part of the country, which recorded an 11.6 percent gain for the month.

Prices moving slightly upward

Meanwhile, the median sales price for existing homes rose for the third month in a row, although slightly. The median sales price for April was $170,200, an increase of only $300 over March's figures. Even so, it represents a gain of 3.2 percent over January's median sales price of $164,800, representing the low point of the market downturn to date.

For the year, prices are down 15.4 percent from the April 2008 level of $201,300.

First-time homebuyers continue to play a major role in the existing home market, but dropped to 40 percent of all purchases, down from 53 percent in March. The NAR attributed the change to a seasonal increase of repeat buyers in the spring homeshopping season.

Foreclosures, short sales are major factors

Sales of distressed properties, including foreclosures and short sales, declined slightly to 45 percent of all sales, but remained within the range it has occupied in recent months. Still, those sales continued to exert downward pressure on sales prices, with distressed properties selling for about 20 percent less than similar properties in the same market.

Lawrence Yun, chief economist for the NAR, said that most sales were concentrated in the lower price ranges, though activity in the midprice range is picking up. He said sales of high-end homes remain sluggish.

Sales have fluctuated in recent months

April's uptick in sales is not necessarily an indication that the housing market is bottoming out. Monthly sales figures also increased in December and February following last fall's collapse of credit markets, only to nudge downward again. April's seasonally adjusted total of 4.68 million units sold is only 3.5 percent below the April 2008 figure of 4.85 million units.

However, NAR economist Yun reported that the number of shoppers looking at homes has increased 14 percent from a year ago. He said this is consistent with NAR forecasts that home sales in the latter part of 2009 will rebound to 10 percent to 20 percent above the second half of 2008.

Applications for purchases up slightly

In a sign that upcoming sales figures may continue to show weak improvement, the Mortgage Bankers Association reported today that mortgage applications for home purchases increased by 1 percent in the week ending May 22. The MBA's four-week moving average for home purchase mortgage applications is also up slightly, by 0.5 percent.