April housing numbers released by the National Association of Realtors were, wait for it … good. Spring is traditionally a busy season for home sales, but the real estate market has been in such a slump for the past couple of years that “ordinary” good news comes as something of a surprise.
In the case of today’s data, existing home sales increased 3.4% from the month before, jumping to a seasonally adjusted annual rate of 4.62 million. It’s even better news when you compare year-on-year numbers: the current pace of sales is a 10% pop from April 2011.
Record-low mortgage-interest rates — just when it seems they can’t sink any lower, they do — are probably helping the cause. Rates on 30-year fixed-interest mortgages have been under 4% all spring. And those rates are dropping, which may continue to boost home sales. Fixed mortgages that run for 30 years are now available at 3.79%, the lowest rate since data tracking began in the 1950s, according to the Associated Press.
Meanwhile, the median price of a home sold in April rose 10.1% from a year ago, to $177,400, according to NAR.
That rise is probably driven by two factors: one is the aforementioned cheap financing, which allows buyers to afford to spend more on homes. The other is that there were fewer distressed sales in the market. Foreclosures and short sales — which typically trade at substantial discounts to non-distressed sales, and thus drag housing prices down — shrank from 37% to the market a year ago to 28% in April.
There’s no reason that these trends wouldn’t continue in the short-term, so I think we could be looking at positive May numbers a month from now.
However, whether the “foreclosure crisis” is over is an open question. It’s quite possible that banks have been forced to slow their processing of distressed sales, but that there are plenty of foreclosures out there waiting to hit the market in a new round.
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The take-away for home buyers, I would say, is to know your local market and to try to get some sense of whether there’s a hidden pipeline of foreclosures that’s going to come to market later in the year.
As it stands, it looks like many parts of Florida are on the “permanent recovery” track. On the other hand, metro areas like Atlanta have been experiencing a stream of foreclosures and have seen prices drop dramatically (in Atlanta’s case, down 17% year-over-year, according to February Case-Shiller numbers). For those cities, there may still be more pain to come.
In pricing terms, we have seen a “quadruple dip” as the market gets off the mat and gets knocked down again, and I wouldn’t rule out one last cycle of that before we see a complete recovery take hold.
For now, though, the pickup in the market from a year ago looks broad-based, with the volume of existing-home sales up 6.5% in the South, up 7.3% in the West, up 14.4% in the Midwest, and up a roaring 19.2% in the Northeast.