|Published:||May 19, 2011 4:59 PM EDT|
|Updated:||May 19, 2011 4:59 PM EDT|
WASHINGTON (AP) - Fewer people purchased previously occupied homes in April. Activity among first-time homebuyers increased and foreclosure sales declined, but those factors weren't enough to signal a recovery in the weak housing market.
Sales of previously occupied homes fell 0.8 percent in April to a seasonally adjusted annual rate of 5.05 million units, the National Association of Realtors said Thursday. That's far below the 6 million homes a year that economists say represents a healthy market.
Purchases made by first-time homebuyers increased to make up 36 percent of sales. That's still below the 40 percent that the trade group says is consistent with better markets. Sales to investors dropped slightly to account for about 20 percent of the market.
Since the housing boom went bust, sales have fallen in four of the past five years and hit a 13-year low last year. Sharp price declines and low mortgage rates haven't been enough to boost home sales this year.
Some people who want to buy can't, mostly because banks have tightened lending requirements and are insisting on larger down payments. Many buyers who are able to qualify for loans are holding off, worried that home prices won't hit bottom for some time. Economists say it could be years before the housing market fully recovers.
And more homes under contract for sale are being delayed, re-negotiated or canceled, mostly because of the tighter lending requirements. A separate survey from the trade group found 11 percent of Realtors said a contract was canceled because an appraisal came in below the negotiated price. And 14 percent said a contract was renegotiated to a lower price because of a low appraisal.
The median sales price in April rose 2.4 percent from March, to $163,700. It's still down 5 percent from the same month one year ago. The median price of a new home is now nearly 31 percent higher than the median price for a previously occupied home. That's twice the normal markup.
The gap is largely because of the flood of foreclosures or short sales - when the lender accepts less than what is owed on the mortgage - which are forcing down prices.
Sales of homes at risk of foreclosure fell in April and made up 37 percent of all purchases. Foreclosure sales declined only because a large number of those homes are backlogged in the courts. They have been held up by a state and federal probe into troubled foreclosure practices by lenders.
A record 1 million homes were lost to foreclosures last year and foreclosure tracker RealtyTrac Inc. expects 1.2 million more will be lost this year.
There's a glut of unsold homes on the market but few buyers are biting. In April, the supply of homes rose to nearly 3.9 million. At last month's sales pace, it would take more than 9 months to clear those homes. Analysts say a healthy supply can be cleared in six months.
The increase in unsold inventory "should continue to weigh on prices," said Dan Greenhaus, chief economic strategist at Miller Tabak + Co.
The situation is much worse when taking into account the "shadow inventory" of homes, economists say. These are homes that are in the early stages of the foreclosure process but, because of backlogged courts or the government probes, have not hit the market for re-sale.
The Mortgage Bankers Association said Monday that about 8.3 percent of homeowners missed at least one mortgage payment in the January-March quarter when adjusted for seasonal factors. That's up 0.7 percent from the previous quarter.
Sales fell across most regions of the country. In April, sales declined 7.5 percent in the Northeast, 1.6 percent in the West and 1 percent in the South. But they rose 5.7 percent in the Midwest.
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