Sales of previously owned homes rose in April for the first time this year as the weather warmed, price increases slowed and more properties were put on the market.
Closings, which usually take place a month or two after a contract is signed, increased 1.3 percent to a 4.65 million annual rate, the National Association of Realtors reported Thursday in Washington. Economists surveyed by Bloomberg projected a 4.69 million pace. The number of homes for sale jumped 16.8 percent in April.
Easier lending standards for some Americans, faster job growth and historically low mortgage rates helped stabilize the industry at the start of the spring selling season. A pickup in construction that boosts housing inventory and tempers gains in property values would provide a further boost to the market.
“The improvement in availability suggests stronger sales activity in the months ahead,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. Home price is the second-best forecaster of existing sales in the last two years, according to data compiled by Bloomberg. Still, “we need to see more building activity.”
Estimates in the Bloomberg survey of 75 economists ranged from 4.6 million to 4.82 million.
The median price of an existing home rose 5.2 percent from April 2013 to $201,700, today’s report showed. The year-over-year increase was the smallest since March 2012.
The number of previously owned homes on the market rose to 2.29 million. At the current sales pace, it would take 5.9 months to sell those houses, the highest since August 2012, compared with 5.1 months at the end of the prior month.
Less than a five months’ supply is considered a tight market, the Realtors group has said.
The sales increase in April “is welcoming,” Lawrence Yun, NAR chief economist, told reporters as the figures were released. “I feel optimistic you would trend higher generally. Now with more inventory, I think there will be more buyers entering the market.”
A pickup in housing construction will help to further alleviate inventory constraints, while higher rental prices might persuade more Americans to purchase properties, Yun said.
At the same time, investors accounted for 18 percent of the home purchases last month, up from 17 percent a month earlier. Seven of 10 investors paid cash. Those transactions accounted for about 32 percent, about the same share as the last year, the report showed. First-time buyers represented 29 percent of all transactions.
Compared with a year earlier, purchases decreased 7.3 percent on an unadjusted basis.
Sales of existing single-family homes increased 0.5 percent to an annual rate of 4.06 million.
Purchases of multifamily properties — including condominiums and townhouses — jumped 7.3 percent to a 590,000 pace.
Sales rose in the West and South. They declined in the Midwest and were unchanged in the Northeast.
Distressed sales, composed of foreclosures and short sales, in which the lender agrees to a transaction for less than the balance of the mortgage, accounted for 15 percent of the total.
Even with the increase last month, the real-estate market has shown signs of strain since the middle of last year as higher borrowing costs and home prices put homeownership out of reach for some Americans.
Existing-home sales have declined since a recent high of 5.38 million in July 2013. Residential construction hasn’t contributed to economic growth the last two quarters, according to Department of Commerce statistics.
Lower limits on loans guaranteed by the Federal Housing Administration and a plunge in distressed sales also have taken a toll.
The average rate on a 30-year, fixed mortgage was 4.14 percent in the week ended today, compared with 3.51 percent a year ago, according to Freddie Mac in McLean, Va. At the same time, borrowing costs have declined since the start of the year when the average rate was 4.53 percent.