This month's data showed several dynamics: sales are up, prices are up, but inventory is also up. That means more folks are buying, probably due to the expiring $8000 federal tax credit, while more properties are hitting the market.
Existing home sales were up 7.6% to a seasonally adjusted annual rate of 5.77 million in April from 5.36 million in March, according to data released Monday by the National Association of Realtors.. That was better than the forecasts of 5.62 million, and comes just after a 7% gain in March.
Regionally, the Northeast was the big winner, with a 21.1% rise in sales. The Midwest was next with a 9.9% gain in sales, and 8.6% in the South. However, the West saw a decline of 6.2%.
While more people were buying, more inventory hit the market at the same time. The raw number of homes for sale rose 11.5% to 4.044 million from 3.626 million in March. Supply is up 2.7% from last year at this time. The months supply at current sales pace indicator of inventory rose to 8.4 from 8.1.
Median prices rose 2.1% to $173,100 from $169,600 a month earlier. They're up 4% from the year-ago level of $166,500. But before you celebrate, consider that these price increase are likely due to prime loans defaulting, and thus higher priced homes hitting the distressed seller list.
More conflicting data:
One day after NAR's existing homes sales numbers were released, the S&P/Case-Shiller National Index released its 20-city home price index. In this report, U.S. home prices posted a 2% gain in the first quarter from a year earlier, but were down 3.2% from the end of 2009.
The national data are released quarterly and are on a two month lag, but the monthly numbers showed a similar pattern. The closely watched 20-city home-price index rose 2.3% in March from a year earlier, but was 0.5% lower than February.
Cleveland posted the largest jump in prices from the prior month, while Las Vegas posted the biggest drop. Eight cities — Atlanta, Charlotte, Chicago, Detroit, Las Vegas, New York, Portland and Tampa — posted new index lows.
But, the West Coast has shown some strength. Prices in Los Angeles, San Diego and San Francisco are all up more than 7% from recent lows. San Diego, in particular, has stood out with 11 consecutive months of increasing home prices. Again, this phenomenon is likely due to higher priced homes hitting the distressed-home market.
What to make of all this? The "shadow" inventory seems to be finally hitting the market, albeit slowly. The banks can only hold off the inevitable for so long through trial modifications and delayed auctions. With sub-prime defaults behind us, increased home prices may be an indication of defaults in the higher priced prime mortgage market. California is the best example of that with sales down, but prices up.
As more foreclosures hit the market, there will be downward pressure on prices in the highly distressed markets of CA, FL, NV and AZ. Without the federal tax credit of $8000 to entice buyers, there could also be a decrease in buyers. Areas like Cleveland and Dallas, that experienced minimal overall price declines, will fare the best as fewer prime borrowers will be tempted to walk away from negative equity positions.
Tags: Current Events, Dallas, Existing Home Sales, Housing Starts, Market Indicators, S&P/Case-Shiller
