It’s been a rough start to the spring buying season, and a stall out may be on the horizon.
Home prices in the United States are just 12.8% off the 2006 peak, according to the comprehensive March home price index report from Black Knight Financial Services.
April home price data from S&P/Case-Shiller released on Tuesday, which found slight increases for the month. The 10-city and 20-city composites recorded miniscule rises for March 2014, increasing .8% and .9% month-over-month.
Separately, the Federal Housing Finance Agency House Price Index found that prices continued to trend higher in the first quarter, and increased for the eleventh consecutive quarter, rising 1.3% in the first three months of 2014.
In terms of sales – existing home sales account for 90% of all home sales, and in April existing-home sales increased for the first time this year, rising 1.3% to 4.65 million, the National Association of Realtors reported. That’s 6.8% below the 4.99 million-unit level in April 2013.
Lawrence Yun, NAR chief economist, noted that he expected the tepid improvement.
“Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point,” Yun said. “Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”
The slow pace of sales and the rise is prices come despite what's happening with interest rates being at near eight-month lows.
Jay McCanless, analyst at Sterne Agee, said that local completed and pending home sales comparisons were above the national numbers in April.
“Top 25 existing home sales during April surpassed the national market with a 3.2% year-over-year (Y/Y) decline versus a 7.3% Y/Y drop for the national metric. The Charleston market reported the highest improvement in unit sales, growing 9.0% Y/Y in April,” he said in a note to clients.
McCanless noted that roughly 18 of the 25 markets they monitor provide monthly pending home sales, which are open contracts to buy a home that have not closed by the end of the month. The average pending sales for these 18 markets decreased 1.9% year-over-year in April.
Six of these 18 markets had a positive year-over-year percentage comparison in April, and four of these (Charleston, Denver, Jacksonville, and Sarasota) are in their third consecutive month of positive year-over-year growth.
Inventory is a key metric, McCanless said.
“Historically, markets with less than six months of inventory to sell have been sellers' markets which have provided homebuilders and existing home sellers the opportunity to raise prices,” he wrote.
“April's average months to sell reading was 4.0 in the Top 25 markets, lower than both 4.1 in March and April's national average of 5.9. Gross inventory in our Top 25 markets increased 9.8% Y/Y, versus a 6.5% Y/Y increase in national inventory levels,” McCanless said. “The Chicago and Houston markets reported the largest decline in April's inventory levels, falling 11.0% and 12.5% Y/Y, respectively.”