April 2015 Existing Home Sales

Sales of existing-homes declined in April 2015 according to the National Association of Realtors.  On an annualized basis, 5.04 million homes were sold, a decline of 117,000 or 3.3 percent versus a month earlier.  April is the second straight month in which annualized sales have been greater than five million.  From a year ago, sales have increased 6.1 percent.

Three of the four regions contracted in the period.  Sales in the West slumped 1.7 percent.  Transactions in the Northeast declined 3.1 percent.  Existing-home sales in the South, the largest region, declined 6.8 percent.   However, realtors in the Midwest executed 1.7 percent more sales than in March.

Prices were higher in the period.  Rising for the 38th consecutive month, the median price rose to $219,400, an increase of 4.1 percent over March and 8.9 percent from a year earlier.  The average price rose 3.2 percent in the period and is up 5.5 percent in the past 12 months.  Cooperative rates may have helped price measures as the cost to borrow remained subdued in the period.  According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 3.67 percent from 3.77 percent a month earlier, remaining below 4.0 percent for the fifth consecutive month.

Inventories rose in the period.  The total number of homes for sales jumped 10.0 percent to 2.21 million units.  At the current pace of sales, it would take roughly 5.3 months to deplete the supply of homes on the market, up from 4.6 months in March.

Despite the monthly setback in sales volume, the existing home market continues to heal. Interest rates are still low enough to have a positive bias for this marketplace.  The stock of homes remains tight relative to the historic norm; anything less than 6 months has been seen as the threshold for a normal supply.  While the sale of an existing home does not directly add to our nation’s output, several ancillary industries are impacted by these transactions.  Lenders, appraisers, title researchers, movers, and furniture sales all benefit when you or your neighbor moves.  For now, there appears to be enough activity in this “used good” marketplace to consider it a contributor to the American economy.  (by C. Cox)