April sales of existing homes rise 7.6% on tax credit

Inventories surge 11.5% to 4.04 million, suggesting glut of supply

WASHINGTON (MarketWatch) -- Resales of homes in the U.S. real estate market rose 7.6% during April to a seasonally adjusted annual rate of 5.77 million as buyers rushed to complete sales before the expiration of a tax credit, according to data released Monday by the National Association of Realtors.

Sales came in stronger than the 5.63 million pace expected by economists surveyed by MarketWatch. Sales in March were revised up to 5.36 million pace from the 5.35 million reported originally. See our complete economic calendar and consensus forecast.

However, inventories surged 11.5% to 4.04 million last month -- an "unwelcome" development, said Lawrence Yun, chief economist for the real estate agents' lobbying group. Read the full press release on the NAR's Web site.

The inventory level represented an 8.4-month supply at the April sales pace. Inventories typically rise in April, but this year's gain was bigger than usual, Yun said. The inventory data are not seasonally adjusted.

The elevated inventories suggest that prices won't rise much over the next year or two, Yun said. Nor did he expect them to fall much, noting that the trend in sales prices has stabilized over the past four months.

The median price is up 4% in the past year at $173,100, according to NAR figures.

It's not clear what's behind the increase in homes for sale, he said.

It could be pent-up supply from homeowners who've wanted to sell but didn't think the market was right. That would also imply pent-up demand.

But it's also possible that investors are putting their properties on the market because they aren't getting the cash flow they need.


Read more>