By Renae Merle
Washington Post Staff Writer
Thursday, May 28, 2009
Bargain hunters drove home sales up slightly in April, but prices plunged and do not appear close to stabilizing, according to industry data released yesterday.
Existing-home sales rose 2.9 percent from March, to a seasonally adjusted annual rate of 4.68 million units, according to the National Association of Realtors. That was slightly better than analysts expected. The April numbers represented a 3.5 percent drop in sales compared with April 2008.
Despite the rise from March to April, a glut of foreclosed homes on the market is pushing down prices, and the housing market remains weak, analysts said. Distressed properties make up 45 percent of the market, and that will get worse as rising unemployment pushes more borrowers into foreclosure, the analysts said.
There were already too many homes on the market, and the inventory increased nearly 9 percent last month. At the current pace, it would take 10.2 months to sell all of them, according to the industry data.
"These figures just go to show that anyone expecting a drastic rebound in sales, or an imminent rebound in home prices, is going to be disappointed," said Mike Larson, a housing analyst at Weiss Research. "We still have a large mountain of inventory we need to chisel away at. It won't happen quickly."
The excess inventory is also putting pressure on median home prices, which fell to $170,200, down 15.4 percent in April compared with the same period a year earlier. That was the second-largest price decline since the group began collecting this data in 1968. "On the price front it was disappointing," said Lawrence Yun, chief economist for the Realtors' group.
While buyers are clamoring for cheap properties, more expensive homes are languishing, Yun said. "The sales are very, very sluggish," he said. "As long as the upper end does not move, it is going to hinder the overall recovery process."
The regions of the country hardest hit by the housing downturn, including California and Nevada, are seeing the biggest price declines, fueling a surge in sales. In April, sales in the West outpaced the rest of the country, surging 19.4 percent compared with a year ago. But prices also fell the fastest, at 21.8 percent.
Sales fell 10.5 percent in the Northeast and 9.9 percent in the Midwest. In the South, the region that includes the Washington metro area, sales fell 8.9 percent in April compared with last year. Prices were down 12.8 percent.
Sales will likely decline during the next few months, but begin to stabilize during the second half of the year, said Patrick Newport, an economist with IHS Global Insight. That is when the economy will "no longer be hemorrhaging jobs profusely" and first-time homebuyers must take advantage of a $8,000 tax credit before it expires at the end of the year, he said.