U.S. home resales up 1.3% in April

Condos show 7.3% increase, but single-family houses lag

This Monday, May 19, 2014 photo shows a duplex home for sale in the Coconut Grove neighborhood in Miami. The National Association of Realtors reports on existing-home sales in April on Thursday, May 22, 2014. (AP Photo/Lynne Sladky)
This Monday, May 19, 2014 photo shows a duplex home for sale in the Coconut Grove neighborhood in Miami. The National Association of Realtors reports on existing-home sales in April on Thursday, May 22, 2014. (AP Photo/Lynne Sladky)

WASHINGTON -- Sales of previously owned U.S. homes increased in April as a bigger supply of properties attracted buyers and raised prospects for a stronger spring selling season.

The National Association of Realtors said Thursday that sales rose 1.3 percent from March to a seasonally adjusted annual rate of 4.65 million. Purchases of homes over the past 12 months have dropped 6.8 percent.

Much of the gains were concentrated in the condominium market, which experienced growth of 7.3 percent. Sales of single-family homes were up just 0.5 percent last month.

"The improvement in availability suggests stronger sales activity in the months ahead," said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. Still, "we need to see more building activity."

Nearly five years into the recovery from the recession, real-estate sales have yet to return to their historic averages. The solid gains made through the middle of 2013 have evaporated, while demand continues to be strong for the most expensive properties and faltering for starter homes and those priced for middle-class buyers.

Home-buying continues to run significantly below the 2013 pace, when 5.1 million previously owned homes were bought. That's well below the 5.5 million that is consistent with a healthy housing market.

Snowstorms and low temperatures delayed sales in the Midwest and Northeast during first two months of 2014. Would-be buyers have also wrestled with higher prices and rising interest rates over the past 12 months, causing the real-estate market to lose some of its momentum from last year.

But in a positive sign, the April report shows that would-be sellers are shaking off the nasty winter and listing their homes for sale. The market has a 5.9-month supply of homes, up from 5.2 months a year ago.

"With the warmer weather and the 'promise' of higher prices, more homeowners put their homes on the market," said Jennifer Lee, a senior economist at BMO Capital Markets.

Prices continue to increase, yet the limited demand appears to have eased the pace of growth. Median prices rose 5.2 percent to $201,700 in April, the slowest growth rate since March 2012, the Realtors said.

Buying picked up last month in the West and South, gains that were offset slightly by a decline in the Midwest and flat sales in the Northeast.

The upper tier of the market remains healthier than the low end. Sales continued to fall last month for homes priced below $250,000, while rising for homes that sold for more than $750,000. First-time buyers -- who tend to purchase lower-priced properties -- represented 29 percent of all sales, much less than the historical average of 40 percent.

Sales of previously owned homes began to slow in the second half of 2013 as mortgage rates crept up from historic lows. Higher home prices, partly because of meager home listings, began to push some buyers out of the market.

Average rates for fixed, 30-year mortgages last week were 4.41 percent, compared to 3.51 percent a year ago. "Rising mortgage rates can account for much of the sluggishness in existing home sales over the past year," John Krainer, a senior economist at the Federal Reserve Bank of San Francisco, wrote this week.

Rates have steadily fallen by 0.33 percentage points since January 2014, although that has yet to drive purchases. An index measuring applications for new mortgages fell 3 percent in the past week and 12 percent in the past year, the Mortgage Bankers Association said Wednesday.

The index of U.S. leading indicators, a gauge designed to predict the economy's future health, posted a solid gain in April, further evidence of stronger growth after a severe winter dampened activity.

The Conference Board's index, a gauge of the outlook for the next three to six months, rose 0.4 percent after a revised 1 percent gain in March, which was larger than previously reported, the New York-based group said Thursday. The median forecast of 47 economists surveyed by Bloomberg called for an advance of 0.4 percent.

The gain indicates the first-quarter slowdown was more the result of harsh weather than underlying weakness in the expansion. Faster job growth that leads to a pickup in wages would help provide a further increase to consumer spending, which accounts for 70 percent of the economy.

"It's a slow, still-uneven recovery, but still modest growth," said Kenneth Kim, an economist at Stone & McCarthy Research in Princeton, N.N. "It's kind of idling gains, not very strong."

Information for this article was contributed by Josh Boak and Martin Crutisinger of The Associated Press and by Michelle Jamrisko and Lorraine Woellert of Bloomberg News.

Business on 05/23/2014

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