USA TODAY - Existing-home sales rose slightly last month to reach their highest level since late 2009, while the supply of homes for sale took a big jump but still remains tight, the National Association of Realtors said Wednesday.
Total existing home sales increased 0.6% to a seasonally adjusted annual rate of 4.97 million in April from an upwardly revised 4.94 million in March, the NAR said. At that level, sales were 9.7% above year-ago levels.
April's annual sales rate was the highest since November 2009, when sales hit an annual rate of 5.44 million. But sales are still at a relatively low level. From 2000 through 2005, before the housing bubble burst, the annual rate of sales averaged more than 6 million a month.
The inventory of homes for sale, meanwhile, expanded in April to a 5.2-month supply from 4.7 months in March. That means all the homes would sell in that time-frame if no new supply was added. Realtors consider a 6-month supply to be a balanced market between buyers and sellers.
Homes are also selling fast. The median time on the market for all homes was 46 days in April, down from 62 days in March and 83 days a year ago.
The 12% jump in inventory in April from March made for the third-straight month of seasonally adjusted inventory expansion.
That could mean that inventory "has finally bottomed," says Jed Kolko, chief economist for real estate website Trulia. On a seasonally adjusted basis, inventory is up 4% in the past three months.
Single-family home sales rose 1.2% in April to a seasonally adjusted annual rate of 4.38 million and are 9% above the year ago pace, the NAR says.
"The robust housing market recovery is occurring in spite of tight access to credit and limited inventory," says Lawrence Yun, NAR chief economist. "If not for those constraints, existing-home sales easily would be well above the 5 million-unit pace," he said.
New-home construction is needed to alleviate the inventory tightness, he says, and "tame" price growth to a healthy pace.
The national median existing-home price was $192,800 in April, up 11% from a year ago. Distressed homes - foreclosures and short sales - accounted for 18% of sales, down from 28% a year ago.
The shift from distressed to conventional sales is an important sign of housing recovery. While year-over-year sales were up 9.7%, they were up 25% when foreclosures and short sales were excluded, Kolko says.
Home sale numbers will continue to improve throughout the year but not do all that well, says Patrick Newport, economist with IHS Global Insight. That's because inventories are still "very lean." More home building is needed to alleviate that situation, he says.
Despite strong price gains in some markets in the past year, existing single-family home sales are still being driven by good affordability and a stronger job market, says PNC Financial Services Group Senior Economist Gus Faucher. If the supply of homes for sale was larger, he'd expect even stronger existing-home sale numbers.
Overall, existing-home sales should climb 8% this year over last, IHS Global Insight says.
Home prices will continue to climb, too, many economists say.
In April, home values were up 0.5% from March, says Zillow's home value index. That made for a 5.2% gain from a year ago.
The big question is how fast the supply of homes for sale will increase. Home value appreciation will moderate as more supply comes on line in the next year, says Stan Humphries, Zillow chief economist.