Despite the unfavorable odds including inventory shortages, continued home price appreciation, and stagnant household income growth, existing-home sales continue to emerge triumphant, and that odds-defying trend is expected to continue.
The National Association of Realtors (NAR) reported that existing-home sales, which include completed buyer transactions of single-family homes, townhomes, condominiums, and co-ops, rose 1.7 percent in April to a seasonally adjusted annual rate of 5.45 million. March's total was revised to 5.36 million and sales are now up 6.0 percent year-over-year in April.
NAR Chief Economist Lawrence Yun noted that the April existing sales data "signals slowly building momentum for the housing market this spring."
Confirming the NAR's data, Ten-X's Residential Real Estate Nowcast for last month predicted that April sales would fall between 5.34 and 5.70 million units, with a target of 5.52.
Ten-X expects May existing home sales to keep up this momentum and fall between seasonally adjusted annual rates of 5.47 and 5.83 million, with a targeted number of 5.65 million–a 3.7 percent increase from April and a 6.2 percent year-over-year gain.
“Though ongoing issues with affordability and low inventory continue to hold back stronger sales growth, the recent increase in home sales is encouraging and indicative of a solid U.S. housing market supported by positive underlying fundamentals,” said Ten-X Chief Economist Peter Muoio. “A strong labor market is adding a solid number of jobs, unemployment remains low despite a rising labor force, wage growth is starting to accelerate, lower energy prices are supporting consumer spending, and low mortgage rates are enticing for homebuyers. Despite facing some broader economic headwinds, market demand remains healthy.”
The NAR data showed that the median existing-home price for all housing types in April was $232,500, up 6.3 percent from $218,700 in April 2015 and within the range of $218,770 to $241,798 predicted by Ten-X in last month’s nowcast. Ten-X suggest that sales prices for existing homes will fall between $226,497 and $250,339 in the month of May with a targeted price of $238,418, representing 2.5 percent month-over-month and 4.2 percent year-over-year gains.
“Home sales are extraordinarily strong, considering how low inventory levels are and how difficult it still is for many buyers to qualify for loans,” said Ten-X EVP Rick Sharga. “One thing worth watching over the coming months is affordability. Home price appreciation continues to outpace wage growth in many markets, and we’re seeing indications that this may be slowing down sales volume in some of the regions where home prices had been accelerating most rapidly.”