WASHINGTON – Americans bought more previously owned homes in April, a hopeful sign that the weak housing market is gradually improving.
The National Association of Realtors said Tuesday that home sales rose 3.4 per cent last month to a seasonally adjusted annual rate of 4.62 million.
Home sales have rebounded after falling in March and are near the pace from January and February, which was the best winter for sales in five years. Still, sales are well below the nearly 6 million per year that economists equate with healthy markets.
A mild winter, starting in November and December, encouraged some people to buy homes earlier this year. That drove up sales in January and February, while likely stealing some demand from March.
First-time buyers, a key segment that is critical to a housing recovery, rose in April to make up 35 per cent of sales. That’s up from 32 per cent in March.
“First-time homebuyers are slowly making their way back,” said Jennifer Lee, an economist at BMO Capital Markets. “That is still below the 40 per cent-to-45 per cent range during healthy times, but the highest in almost half a year.”
Homes at risk of foreclosure accounted for 28 per cent of sales. That’s roughly in line with March sales but down from 37 per cent of sales in April 2011.
The median sales price in April rose to $177,400, up 10.1 per cent from a year ago.
Sales rose in all regions. They increased 5.1 per cent rise in the Northeast, 3.5 per cent in the South, 4.4 per cent in the West and 1 per cent in the Midwest.
Modest increases in home sales are the latest sign that the market could be starting to turn around nearly five years after the housing bubble burst.
The sales pace in January was the highest since May 2010 — when a popular home-buying tax credit expired. Builders are more confident and are starting to builder more homes. Mortgage rates have never been cheaper. And the job market is improving, which has made more people open to buying a home.
Employers have added 1 million jobs in the past five months. And unemployment has dropped a full percentage point since August, from 9.1 per cent to 8.1 per cent in April.
Still, many would-be buyers are having difficulty qualifying for home loans or can’t afford the larger down payments being required by banks.
Even some would-be home buyers are holding off because they fear that home prices could keep falling.
Previously occupied homes represent 80 per cent of the overall home market.
Builders have grown more confident since last fall, in part because more people have expressed an interest in buying a home. In May, builder optimism rose to the highest level in five years, according to the National Association of Home Builders/Wells Fargo builder sentiment index.
Last week, the Commerce Department reported that builders started work on more homes and apartments in April, pushing housing construction to a seasonally adjusted annual rate of 717,000 homes. That was near a rate of 720,000 homes and apartments being built in January, which had been a three-year high. But even with the recent strength, housing starts remains at roughly half the pace that economists consider healthy.