Wednesday May 27, 04:54 PM
US existing home sales climb in April
By Veronica Smith
WASHINGTON (AFP) - US existing home sales climbed 2.9 percent in April, rebounding from a decline in the prior month, as plummeting prices drew buyers, the National Association of Realtors reported Wednesday.
The real estate industry group said sales of homes increased to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March.
NAR initially estimated the March rate at 4.57 million units.
The April sales pace exceeded the consensus forecast by analysts of 4.65 million units.
The group said the pace was 3.5 percent below the 4.85 million-unit level in April 2008.
Strong buyer activity in lower price ranges fueled the sales jump, NAR said.
The deepening crisis in the housing sector, after a years-long boom collapsed more than two years ago, has produced a surge in foreclosures and flooded the market with homes, many of them at fire-sale prices.
"Most of the sales are taking place in lower price ranges and activity is beginning to pick up in the midprice ranges, but high-end home sales remain sluggish," said Lawrence Yun, NAR's chief economist.
Yun said that although first-time buyers continued to influence the market, the seasonal spring pick-up in sales also had attracted repeat buyers.
First-time homebuyers -- buyers who have not owned a home in three years -- are eligible for a temporary federal housing tax credit of up to 8,000 dollars for principal homes bought this year through November 30.
With the support of federal authorities, home mortgage interest rates are hovering at historic lows, helping to spur buying.
According to government-controlled mortgage finance giant Freddie Mac (NYSE: FRE - news) , mortgage rates fell in April to a low last seen in 1971, at 4.81 percent for a 30-year fixed-rate mortgage, compared with 5.92 percent a year ago.
Yun called on the Federal Reserve to start buying so-called jumbo loans, those above a level ranging from 417,000 to 729,750 dollars, depending on the region, that carry a higher interest rate because they are not federally guaranteed.
"The Federal Reserve needs to help restore liquidity for the jumbo mortgage market by buying these loans under the TALF program," he said.
The central bank launched the Term Asset-Backed Securities Loan Facility (TALF) last November to get frozen credit flowing again to households and small businesses.
"Because foreclosed properties will likely be released into the market over the rest of year, it is critical that distressed homes be quickly cleared from the market," Yun said.
Distressed properties accounted for 45 percent of all sales in April, NAR said, and continued to pressure the median price because they generally sell at a discount relative to traditional homes.
The association said that median existing-home prices fell 2.9 percent in April to 170,200 dollars, 15.4 percent below a year ago.
The backlog of existing homes on the market ballooned 8.8 percent over the month to 3.97 million units, representing a 10.2.-month supply at the current sales pace.
That compared with a 9.6-month supply in March.
Yun said the gain in inventory was "largely seasonal" and that inventory over the past few months "has remained consistently lower in comparison with a year earlier."
"The slow downward trend continues. But there is a long way to go before prices stabilize," said Ian Shepherdson at High Frequency Economics.
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