Tight inventories of listings for sale and rising residential mortgage interest rates slightly deflected existing home sales in April 2018 as reported by the National Association of Realtors®. Actual sales in April 2018 of 460,000 compared to 447,000 a year ago were up 2.9 percent, but sales year-to-date dipped 0.65 percent. From a seasonally adjusted annualized rate (SAAR), sales were off 1.4 percent versus a year ago at a pace of 5.46 million transactions.
The median price of $257,900 in April 2018 was up 5.3 percent compared to a year ago, while the average price of $297,300 ratcheted up 3.3 percent in the same period. While the number of active listings increased by 9.8 percent to 1.80 million in April 2018, the number of active listing dropped 6.3 percent compared to a year ago.
The following graph shows the trend in housing sales based on a trailing 12-month basis (TTM), but with monthly median prices. Sales have wobbled in the last 12-months but have generally followed a relatively flat line.
Sales and median prices are shown on a monthly basis in the following two graphs. Sales have been up in two of the four months and down in two months compared to a year ago. Median price, on the other hand, continued on an upward accent driven by minimal inventory of just 4.0 months with 6.0 months considered normal and contrasted to 4.2 months a year ago
The trend and corresponding seasonality in average prices are shown in the next graph. June has been the peak median sales price month for the past five years.
Other metrics and insights from the April 2018 NAR release included:
- April’s median price increase of 5.3 percent now makes a consecutive 74 months of price gains on a year-over-year basis
- The typical property was on the market just 26 days in April 2018 before a signed contract was delivered, down from 29 days a year ago
- More than one-half (57 percent) of all April 2018 homes sales were on the market less than one month
- First time-buyers completed one-in-three transactions in April (33 percent), the most since July 2017 but down ever slightly from 34 percent a year ago. Contrary to expectations that Millennials would not be buying home, for the third year in a row they are largest homebuyer population cohort
- All-cash sales made up one-in-five closings in April (21 percent), unchanged from a year ago
- Distressed sales continue to dwindle, making up just 3.5 percent of April sales – the lowest ever since NAR commenced tracking this metric in October 2008
- 3 percent of April’s distressed sales were foreclosures and just 0.5 percent short sales
I am still positive on the U.S. housing market this year and am sticking with my forecast of a 1.96 percent increase in existing home sales – which is very close to NAR’s current 1.8 percent gain estimate. Where the market goes will be a function of jobs, interest rates, incomes and inventory. The number of sales typically peak in June (the past four years) or July and August. The prime sales period is ahead of us, with current sales off minimally. Do keep in mind, however, 30-year conventional fixed-rate residential loan interest rates hit a seven-year peak for the week ending May 24, 2018 according to Freddie Mac. But they remain highly affordable at 4.66 percent.
Wait a month or two to assess the market for 2018.