The numbers came in for the housing market and they show that even though there were less foreclosures and more first-time buyers, it isn't enough to signal a recovery in the weak housing market.
updated 5/19/2011 10:39:53 AM ET
WASHINGTON — Fewer Americas purchased previously occupied homes in April. Activity among first-time homebuyers increased and foreclosure sales declined, but those factors weren't enough to signal a recovery in the weak housing market.
Sales of previously occupied homes fell 0.8 percent in April to a seasonally adjusted annual rate of 5.05 million units, the National Association of Realtors said Thursday. That's far below the 6 million homes a year that economists say represents a healthy market.
Purchases made by first-time homebuyers rose 3 percent to 36 percent. That's still below the 40 percent that the trade group says is consistent with better markets.
Annual sales hit a record high of nearly 7.1 million homes in 2005. Since then, sales have fallen in four of the past five years before hitting a 13-year low last year. Sales are falling even as prices decline. The median sales price in April rose 2.4 percent from March, to $163,700. But it's still down 5 percent from the same month one year ago.
Sales of homes at risk of foreclosure fell 3 percent in April, to 37 percent of all purchases. Foreclosure sales declined only because a large number of those homes are backlogged in the courts. They have been held up by a state and federal probe into troubled foreclosure practices by lenders.
A record 1 million homes were lost to foreclosures last year and foreclosure tracker RealtyTrac Inc. expects 1.2 million more will be lost this year. Homes at risk of foreclosures usually sell at 20 percent discounts compared to their original listing price. So when sales of distressed properties rise, prices fall.
There's still a glut of unsold homes on the market but few buyers are biting. In April, the supply of homes rose to nearly 3.9 million. At last month's sales pace, it would take more than 9 months to clear those homes. Analysts say a healthy supply can be cleared in six months.
The situation is much worse when taking into account the "shadow inventory" of homes, economists say. These are homes that are in the early stages of the foreclosure process but, because of backlogged courts or the government probes, have not hit the market for resale.
Many would-be buyers are holding off, worried that home prices won't hit bottom for some time. Others who normally would buy are having trouble getting mortgages because banks are tightening their lending standards.
Sales fell across most regions of the country. In April, sales declined 7.5 percent in the Northeast, 1.6 percent in the West and 1 percent in the South. But they rose 5.7 percent in the Midwest.
Sales of single-family homes fell 0.5 percent to an annual rate of 4.42 million homes sold. Sales of condominiums fell 3.1 percent to a rate of 630,000 units.
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