Sales of existing U.S. homes rose in April for the first time in three months, indicating the industry is stabilizing.
Purchases of previously owned houses, tabulated when a contract closes, increased 3.4 percent to a 4.62 million annual rate, figures from the National Association of Realtors showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a rise to a 4.61 million rate.
Gains in employment, depressed prices and record-low mortgage rates may bring more properties within reach of buyers, eliminating a source of weakness for the world’s largest economy just as risks from Europe’s debt crisis climb. At the same time, efforts to reduce foreclosures and free up financing are just beginning to take root, signaling a sustained housing recovery will take time to develop.
“We are making incremental progress,” said Millan Mulraine, a senior U.S. strategist at TD Securities Inc. in New York, who correctly forecast the sales pace. “People are becoming more confident about job prospects and about taking on mortgages. This is all positive for the economy.”
Stocks held earlier gains after the report. The Standard & Poor’s 500 Index rose 0.8 percent to 1,325.94 at 10:17 a.m. in New York. The S&P Supercomposite Homebuilder index climbed 2.9 percent.
Estimates in the Bloomberg survey of 73 economists ranged from 4.47 million to 4.8 million. The prior month’s pace was revised to 4.47 million, from a previously reported 4.48 million. April’s total was just shy of the 4.63 million reached in January that was the highest in more than a year.
Existing-home sales climbed to 4.26 million last year from 4.19 million in 2010. Demand peaked at 7.1 million in 2005 during the housing boom. In 2008, sales totaled 4.11 million, the least since 1995. Resales may rise to a 4.6 million to 4.7 million range this year and reach as much as 4.8 million in 2013, the Realtors group projected this month.
The median price of an existing home climbed 10 percent to $177,400 from $161,100 in April 2011, today’s report showed. It was the biggest year-to-year gain since January 2006 and reflected a seasonal mix in demand toward bigger houses and fewer distressed sales.
Families tend to buy in the spring, leading to an increase in sales of bigger properties, Lawrence Yun, NAR chief economist, said in a news conference today as the figures were released.
The number of previously owned homes on the market climbed 9.5 percent to 2.54 million. At the current sales pace, it would take 6.6 months to sell those houses compared with 6.2 months at the end of the prior month. April is usually the peak, or close to the peak, month for inventory for the year, Yun said.
Of all purchases, cash transactions, distressed properties and investors accounted for a smaller share last month, according to Yun.
Sales of existing single-family homes increased 3 percent to an annual rate of 4.09 million, while those of multifamily properties, including condominiums and townhouses, rose 6 percent to a 530,000 pace.
Purchases improved in all four regions.
A real estate agents group’s affordability index, which is based on a combination of resale prices, household income and mortgage rates, reached a record high in the first quarter, a report this month showed.
Record-Low Mortgage Rates
Borrowing costs remain attractive. The average rate on a 30-year fixed mortgage fell to an all-time low of 3.79 percent in the week ended May 17, according to data from Freddie Mac going back to 1971. The average 15-year rate dropped to 3.04 percent, also a record low, the McLean, Virginia-based mortgage- finance company said.
Rising employment and incomes may provide more support for housing. The unemployment rate fell in April to a three-year low of 8.1 percent as employers added 115,000 jobs, according to Labor Department figures.
The Commerce Department may report tomorrow that new-home sales, tabulated when contracts are signed, rose 2.6 percent in April to a 337,000 pace, according to the Bloomberg survey median.
The steadying outlook for residential real estate may reinforce projections the industry that helped trigger the recession will contribute to economic growth this year. Housing starts climbed to a 717,000 annual rate in April, more than anticipated. The National Association of Home Builders/Wells Fargo confidence index jumped in May to a five-year high.
PulteGroup Inc. (PHM), the largest U.S. homebuilder by revenue, said orders rose 15 percent to 4,991 homes in its first quarter, and backlogs increased 12 percent to 5,798 homes.
“It was the first quarter in several years that fundamental demand came in stronger than expected,” Richard Dugas, chief executive officer of the Bloomfield Hills, Michigan-based company, said during an April 26 conference call with analysts. “We are pleased with how the year has started off, including a continuation of better sales activity thus far in April.”
Foreclosure filings fell to a five-year low in April as lenders sought to avoid seizing property. The number of default, auction and seizure notices sent to homeowners totaled 188,780 last month, down 14 percent from a year earlier and 5 percent from March, according to RealtyTrac Inc.
There are signs property values may also stabilize. Home prices rose 0.6 percent in March from the previous month, the first sequential advance since July and the third straight month-over-month gain excluding short sales and foreclosure sales, mortgage data company CoreLogic Inc. reported. Prices fell 0.6 percent from a year earlier, it said.