Sales of previously owned U.S. homes rose in April, a report showed on Wednesday, providing more evidence the housing market is stabilizing and backing views the recession is nearing an end.
The National Association of Realtors said sales climbed 2.9 percent to an annual rate of 4.68 million as the traditional spring home-buying season swung into gear. However, the stock of unsold homes swelled 8.8 percent to 3.97 million, the highest since November.
Both the trade group and economists shrugged off the rise in home inventories as mainly the result of seasonal factors, with sellers taking advantage of spring to try and sell their properties.
Most of the sales are taking place in lower price ranges and activity is beginning to pick-up in the mid-price ranges, but high-end home sales remain sluggish, NAR chief economist Lawrence Yun told reporters.
The data appeared to have little impact on major U.S. stock indexes, which were close to flat in early afternoon, but the Dow Jones Home Construction Index rose 2.3 percent.
This report seems to offer another piece of evidence that home sales are stabilizing, said Zach Pandl an economist at Nomura Global Economics in New York.
The data also offered a fresh hint that the 17-month U.S. economic downturn, triggered by the collapse of the housing market, was easing and could well end by the third quarter, as a National Association of Business Economists survey published on Wednesday predicted.
The pace of job losses slowed last month, claims for unemployment aid have come off their peaks and consumer confidence has risen from recent rock-bottom levels.
HOME SALES STABILIZING
The national economy is showing some initial signs of stability, U.S. Treasury Secretary Timothy Geithner said in Boston as he announced $1.5 billion in federal tax credits for community development projects. This is just the beginning; however, we have a long way to go.
Even when the economy begins to grow, analysts expect only a tepid recovery. Plunging home values and rising unemployment have forced consumers to cut spending and households are expected to continue to rebuild savings for months to come.
The home sales report showed sales of single-family homes rose 2.5 percent last month to an annual rate of 4.18 million, while multi-family units -- the hardest-hit sector -- jumped 6.4 percent to a 500,000 annual pace.
Sales were up in three of the four regions.
Despite the increase in sales, which was driven by transactions involving foreclosed properties, the inventory of homes on the market increased. The NAR said at the current sales pace, it would take 10.2 months to clear the stock.
The increase in inventories was largely driven by seasonal factors and reflects sellers entering the spring market, said Anna Piretti, an economist at BNP Paribas in New York. She noted that inventories had come down from the highs recorded in 2007 and 2008.
The median home price fell 15.4 percent from a year ago to $170,200 in April, the second biggest percentage decline on record. The NAR blamed distressed sales, which accounted for 45 percent of all transactions, for depressing prices.
A separate home price measure from the Federal Housing Finance Agency showed prices fell 7.3 percent over the 12 months through March, contrasting with an 18.7 percent drop seen in the Standard & Poor's/Case-Shiller survey on Tuesday.
Our latest data are consistent with growing evidence that housing market conditions may be stabilizing in some parts of the country, especially areas not covered by the other major repeat sales price index, FHFA Director James Lockhart said.
The Mortgage Bankers Association said applications for home loans fell to their lowest level since early March last week as the highest lending rates in more than two months sapped demand for refinancing. However, demand for loans to buy homes rose.
(Additional reporting by Ellen Freilich and Lynn Adler in New York; Editing by Andrea Ricci)