Purchases of previously owned homes unexpectedly fell in April, a sign the industry's recovery remains uneven.
Contract closings dropped 3.3% to a 5.04 million annualized rate after a 5.21 million pace that was the strongest in almost two years, figures from the National Association of Realtors showed Thursday in Washington. The median forecast of 78 economists in a Bloomberg survey called for a rise to 5.23 million. Prices jumped as the number of houses for sales declined from the same time last year.
The rising prices and a limited supply of properties, combined with too-small growth in pay and lingering concerns about taking on too much debt, are holding the market back. Signs that younger Americans are forming families and venturing out on their own remain a bright spot that could propel a rebound in the housing industry down the road.
"The trajectory for the housing recovery is going to be up, but the rate of improvement won't be dramatic," Tom Simons, a money market economist at Jefferies in New York, said before the report. "The labor market is improving, but wages haven't really accelerated. Consumers are continuing to pay down debt and are not willing to put down money for a mortgage at this time."
Estimates in the Bloomberg survey of economists ranged from 4.96 million to 5.32 million. The prior month's pace was revised from a previously reported 5.19 million.
Compared with a year earlier, purchases increased 5.5% before adjusting for seasonal variations.
Existing-home sales, tabulated when a purchase contract closes, account for more than 90% of the residential market. New-home purchases, which make up about 8% and are tabulated when contracts are signed, are considered a timelier barometer.
The median price of an existing home climbed 8.9% from a year earlier, the biggest 12-month gain since January 2014, to reach $219,400, the report showed.
While increasing property values hurt affordability for prospective buyers, they help bolster owners' household wealth and build confidence among those whose homes are still worth less than their mortgages.
One reason prices are picking up is a lack of supply. The number of previously owned homes on the market fell 0.9% from a year earlier to 2.21 million.
"We don't want prices to get too far ahead of income, but that is what's happening because of lack of supply," Yun said in a press conference as the figures were released. Given the trend, the median price this year will probably top 2006 as the highest on record, he said.
At the current sales pace, it would take 5.3 months to sell those houses compared with 4.6 months at the end of the prior month. Less than a five months' supply is considered a tight market, the Realtors group has said.
Sales of existing single-family homes decreased 3.7% to an annual rate of 4.43 million. Purchases of multifamily properties — including condominiums and townhouses — were unchanged at 610,000.
Purchases declined in three of four regions, led by a 6.8% drop in the South.
Even as the housing recovery makes progress, it still has a ways to go. A record 7.08 million previously owned houses were sold in 2005. Three years later, existing-home sales plunged to a 13-year low of 4.11 million in 2008.
