WASHINGTON - Existing home sales increased at a 7.6% annual rate in April to 5.77 million sales, far exceeding economists’ estimates as buyers rushed to capitalize on the homebuyers’ tax credit, the National Association of Realtors reported today.
Sales in March were revised to 5.36 million from 5.35 million reported last month.
Economists polled by Thomson Reuters expected 5.630 million existing home sales in April, according to the median estimate.
The tax credit “clearly has done its job” and “had an impact for first-time buyers,” said Lawrence Yun, the NAR’s chief economist. May and June sales “could also remain elevated,” he said.
To qualify for the homebuyer tax credit, buyers needed to have signed a contract by the end of April and need to close on the sale by the end of June.
Inventories of homes for sale increased to 4.04 million and to a rate of 8.4 months in April.
Yun said the inventories increase was “surprising” and he said he sees “no meaningful gain in home values” this year as a result of the higher home inventories. He said there is not likely to be a decline in prices either.
The median existing home sales price was $173,100 in April, a 4.0% increase from last year and a 2.1% gain from March. The March median price was revised to $169,600.
Yun attributed the stronger median home prices to “stabilizing trends in distressed sales.” Distressed sales accounted for 33% of sales in April, down from 45% in the same month last year.
The spike in home sales driven by the tax credit “is likely to be more transitory than sustained,” said Guy LeBas, chief fixed income strategist at Janney Capital Markets, in a research note published May 21. “Underlying demand trends remain stagnant at best, as high unemployment still poses a problem for many potential homebuyers,” he said.
New home sales data for April will be released on Wednesday by the Commerce Department.
