Sales of previously owned homes dropped in April, falling short of many analysts’ expectations for this key month of the spring selling season.
But the number of households that fell seriously behind on mortgages in the first quarter is down, suggesting a smoother path ahead, if only the housing market could shed the foreclosures that continue to drag down home prices.
The findings come from two industry reports released Thursday, both of which signaled a slow housing recovery. Even though mortgage defaults are shrinking, the homes in foreclosure remain at an alarmingly high level, and a meaningful pickup in sales is needed to purge them.
Existing sales dropped 0.8 percent to a seasonally adjusted rate of 5.05 million in April from March, the National Association of Realtors reported. They were down 13 percent from a year earlier, when a federal home-buyer tax credit ignited a buying frenzy.
The Realtors group blamed the sluggish activity on unnecessarily tight lending standards. Low home appraisals also botched many potential sales, the group said.
Some economists expected sales to rise in part because the Federal Housing Administration, which backs low down-payment loans, raised its fees in mid-April. They thought buyers would rush to close on homes ahead of the increase, said Patrick Newport, an economist at IHS Global Insight. Going forward, the higher fees will hurt demand, he said.
As sales fell, the supply of for-sale homes rose 9.9 percent to 3.87 million in April, and the national median existing-home price plunged 5 percent to $163,700 from a year ago.
The bright spot is the drop in loans that are at least 90 days late or in foreclosure. About 8.1 percent of loans were seriously delinquent in the first quarter, the lowest level since early 2009, the Mortgage Bankers Association said. About 4.5 percent of loans were in the foreclosure process, down from the 4.6 percent record high in the previous quarter.
Some lenders temporarily halted foreclosures late last year after widespread reports of paperwork errors. Even so, more than 4 million households remain at serious risk of losing their homes, meaning a steady supply of foreclosures will weigh down the market for years, said Paul Dales, a senior economist at Capital Economics.
A handful of states — Florida, California, Illinois, New York and New Jersey — account for more than half of all foreclosures, the bankers group reported. Especially problematic is Florida, home to 24 percent of the mortgages in foreclosure.