US Home resales gain 2.9% in April

Home resales in the United States gained in April as foreclosure auctions and improved affordability spurred bargain hunters.

Purchases increased 2.9 per cent to an annual rate of 4.68 million, close to forecasts, from 4.55 million in March, the National Association of Realtors (NAR) said yesterday in Washington. The median price slumped 15 per cent from a year earlier, the second-biggest drop on record, and distressed properties accounted for 45 per cent of all sales.

Record-low mortgage rates, tax credits and falling prices may keep boosting demand and trim the glut of unsold homes. In turn, a pick-up in sales will help stem the slump in property values, which is key to shoring up household finances and construction as the economy begins to emerge from the recession.

‘An increase in affordability has seemingly enticed potential homebuyers,’ Michelle Meyer, an economist at Barclays Capital Inc in New York, said before the report. ‘We believe home sales have stabilised.’

Economists forecast resales would rise 2 per cent to a 4.66 million annual rate from a previously reported 4.57 million pace in March, according to the median of 72 projections in a Bloomberg News survey. Estimates ranged from rates of 4.47 million to 4.8 million. Sales were down 3.5 per cent compared with a year earlier.

The number of houses on the market climbed 8.8 per cent to 3.97 million in April, reflecting the gains usually associated with this time of the year, NAR said. At the current sales pace, it would take 10.2 months to sell those homes, up from 9.6 months in March.

Resales of single-family homes increased 2.5 per cent to an annual rate of 4.18 million. Sales of condos and co-ops rose 6.4 per cent to a 500,000 rate.

The gain last month was led by a 12 per cent jump in the Northeast and a 3.5 per cent gain in the West. Purchases also climbed in the South and fell in the Midwest.

Foreclosure filings in the US rose to a record in April for the second consecutive month, Realtytrac Inc, a seller of foreclosure data, said on May 13, as the jobless rate climbed to its highest in more than a quarter century. Foreclosure filings jumped 32 per cent from a year earlier, the group added.

The share of distressed sales last month was down from March, reflecting normal volatility, NAR said. First-time buyers accounted for about 40 per cent of April sales, also down from March, the group noted.

Still, ‘it’s a non-regular market in terms of so much distressed sales activity’, Lawrence Yun, chief economist of the agents group, said in a press briefing. The market is led by gains in sales of lower-priced properties, while there is ‘very little’ activity at higher price points, Mr Yun said.

Multiple bids are now common on foreclosure sales, while properties selling for US$750,000 or more are taking 40 months to sell on a median basis, Mr Yun said. Higher mortgage rates for jumbo loans are one reason for the disparity, he added.

Source : Business Times – 28 May 2009