Existing home sales in April failed both to match their corresponding numbers in March and to live up to the consensus of analysts in advance of this morning's National Association of Realtors® (NAR) report. Sales of existing single family homes, condominiums, and coops were at a seasonally adjusted annual rate of 5.04 million units in April, down 3.3 percent from an upwardly revised (from 5.19 million units) 5.21 million in March.  Analysts had expected on average a rate of 5.22 million units.

NAR tried to put a cheery spin on the news pointing out that sales were 6.1 percent higher than in April 2014, that it was the seventh month of year-over-year increases, and the second month in a row that sales had topped 5 million.  The typical home also sold in the shortest time frame in almost two years.

The decline was almost entirely due to single family home sales which were down 3.7 percent to a seasonally adjusted annual rate of 4.43 million in April from 4.60 million in March.  Those sales remain 6.5 percent higher than a year earlier.  Condo and co-op sales were unchanged from March at a rate of 610,000 but the rate was up 3.4 percent year-over-year.

Lawrence Yun, NAR chief economist, said, "April's setback is the result of lagging supply relative to demand and the upward pressure it's putting on prices.  However, the overall data and feedback we're hearing from Realtors® continues to point to elevated levels of buying interest compared to a year ago. With low interest rates and job growth, more buyers will be encouraged to enter the market unless prices accelerate even higher in relation to incomes."

The median existing-home price for all housing types in April was $219,400, an 8.9 percent gain from a year earlier and the 38^th consecutive month of year-over-year price appreciation.  It is also the largest price increase since a 10.1 percent annual change in January 2014. The median price for an existing single-family home was $221,200, up 10.0 percent and the median condo price was $206,100, a 0.4 percent annual increase.

Inventory increased by 10.0 percent from March to April with 2.21 million existing homes for sale, a 5.3 month supply at the current sales pace compared to 4.6 months in March.  The inventory is 0.9 percent below the April 2014 level.

"Housing inventory declined from last year and supply in many markets is very tight, which in turn is leading to bidding wars, faster price growth and properties selling at a quicker pace," says Yun. "To put it in perspective, roughly 40 percent of properties sold last month went at or above asking price, the highest since NAR began tracking this monthly data in December 2012."

With demand far exceeding supply, properties sold in April faster (39 days) than at any time since July 2013 (42 days) and the second shortest time (37 days in June 2013) since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 180 days in April, while foreclosures sold in 50 days and non-distressed homes took 38 days. Nearly half (46 percent) of homes sold in April were on the market for less than a month.

The percent share of first-time buyers remained at 30 percent in April for the second consecutive month. The share was 1 percentage point higher than a year earlier.  Individual investors accounted for 14 percent of sales, unchanged from March but down by 4 points from April 2014, and 71 percent of them paid cash for their purchase.  Twenty-four percent of all sales were cash transactions, down from about a third the previous April.  

Seven percent of sales were foreclosures and 3 percent were short sales compared to a total distressed sales share of 15 percent in April 2014.  Foreclosures sold for an average discount of 20 percent below market value in April (16 percent in March), while short sales were discounted 14 percent (16 percent in March).

With new mortgage financing disclosure forms set for implementation on August 1, NAR President Chris Polychron cautions that some home sale transactions could be delayed. "There likely will be bumps in the closing process while all parties get used to the new requirements," he said. "We hope that the move away from the HUD-1 is smooth, but even if only 10 percent of transactions experience closing issues, that's as many as 40,000 transactions a month."

Existing home sales declined in three of the four regions, with only the Midwest posting a modest gain.  In the Northeast transactions were down 3.1 percent to an annual rate of 620,000, but are 1.6 percent above a year ago. The median price in the Northeast was $253,200, 3.6 percent higher than in April 2014.

Midwest sales increased 1.7 percent to an annual rate of 1.22 million, a 13.0 percent gain from a year earlier. The median price was $173,700, up 11.4 percent on an annual basis.

Existing-home sales in the South declined 6.8 percent to an annual rate of 2.04 million but remained 3.6 percent above April 2014. The median existing home price was $189,400, up 8.5 percent from a year ago.

Sales in the West decreased 1.7 percent to an annual rate of 1.16 million, 6.4 percent above a year ago. The median price in the West was $318,700, an annual increase of 10.0 percent.