WASHINGTON (5/23/14)--Climbing to their fastest pace since December, existing-home sales rose 1.3% in April to 4.65 million, according to data released Thursday by the National Association of Realtors.
The increase, which fell just short of expectations, may have largely been driven by a higher volume of homes on the market, pushing up affordability and offering more options to consumers (Economy.com May 22).
Inventories swelled by nearly 17% in April to 2.29 million existing for-sale homes, the largest gain since 1999, while median sales prices for existing homes only climbed to $201,700 in April, a mere 5.2% increase from levels seen a year ago.
For context, in April 2013 home prices had increased about 13% year-over-year.
With existing-home sales still 6.8% behind last year's pace, economists' reactions to the housing market data have been tepid.
"The increase reverses just a fraction of recent weakening," Jim O'Sullivan, High Frequency Economics chief U.S. economist, told MarketWatch (May 22). "Sales will need to keep rising to establish a renewed uptrend."
Mortgage rates also dropped slightly last week, the Mortgage Bankers Association (MBA) reported, but purchase applications have not responded in kind.
The average contract interest rate for 30-year fixed-rate mortgages fell to 4.33%--the lowest since November--from 4.39%, according to the MBA.
But purchase applications also fell by about 3%, despite a small rebound in refinancing activity. Purchase applications also sit 12% lower than levels from last year at this time.
"Rates on conforming loans hit six-month lows and jumbo rates hit 12-month lows," Mike Fratantoni, MBA chief economist, told CNBC.com (May 21). "Refinance volume picked up somewhat as a result, but it still remains more than 65% below last year's pace."