Sales of previously owned homes increased in April to a three-month high, led by a surge in the Midwest and indicating further improvement in the housing market during the busy spring-selling season, National Association of Realtors data showed Friday.
Contract closings rose 1.7% to a 5.45 million annual rate (the forecast was 5.4 million). Purchases climbed 4.9% from April 2015, before seasonal adjustment. The median price of an existing home rose 6.3% from April 2015 to $232,500, the highest since June 2015.
Sales in the Midwest jumped 12.1% to a 1.39 million pace, the strongest since December 2006; purchases were also up in the Northeast.
The inventory of available properties dropped 3.6% from April 2015 to 2.14 million units.
"The demand side is fairly solid — you have ongoing job and income growth, you still have favorable mortgage rates and you're seeing increased household formation," said Richard Moody, one of the best forecasters of existing-home sales over the past two years, according to data compiled by Bloomberg. "Whether it's new construction or existing homes, the brake on the pace of activity is the supply side."
The Midwest "is the most affordable region of the country and that's where the buyers still remain strong," Lawrence Yun, NAR chief economist, told reporters as the figures were released.
"The tight inventory condition still persists and a housing shortage is still present." Generally, "there's plenty of room to grow" in the housing market, he said.
At the current pace, it would take 4.7 months to sell those homes, compared with 4.4 months in March. Less than a five months' supply is a tight market, the Realtors group has said.
