UPDATE 2-U.S. existing home sales edge down, prices rise

Mon Apr 22, 2013 1:03pm EDT

* Tight inventory restraining pace of the housing recovery
    * Median prices rise the most since November 2005
    * Purchases of distressed properties lowest since 2008


    By Margaret Chadbourn
    WASHINGTON, April 22 (Reuters) - U.S. home resales edged
downward in March, pointing to some slowdown in the housing
market recovery pace as overall economic activity cools.
    The National Association of Realtors said on Monday existing
home sales slipped 0.6 percent last month to a seasonally
adjusted annual rate of 4.92 million units. 
    Economists polled by Reuters had expected home resales to
rise to a 5.01 million-unit rate. 
    "The disappointing pace of home sales provides some evidence
that positive momentum in the housing sector is beginning to
leak lower," said Millan Mulraine, a senior economist at TD
Securities in New York.
    Still, the housing market recovery that has helped boost the
economy remains intact, and there is some evidence the slowdown
in sales may represent supply constraints more than crimped
demand.
     Sales in March were 10.3 percent higher than the same month
last year, and the median price for a home resale was up 11.8
percent, the biggest increase since November 2005, to $184,300.
    "The report suggests that the overall thrust of the sector
remains positive, with the demand and supply dynamics continuing
to favor further price gains," said Mulraine.
    The data added to other reports such as employment and
factory activity suggesting a loss of momentum in the economy as
the first quarter ended.
    U.S. stocks were mixed as corporate earnings pointed to an
uncertain growth outlook. Prices for U.S. Treasury debt rose to
session highs on the data as it was seen as confirmation of some
slowing in U.S. economic growth.
    
 
    
    SUPPLY CONSTRAINTS
    The supply of existing homes on the market for sale rose 1.6
percent during the month to 1.93 million, which represented 4.7
months' supply at March's sales pace, up from 4.6 in February.
    That's is way below the 6 months' worth normally considered
as an ideal balance between demand and supply. A year earlier,
the inventory of unsold homes was 2.32 million, a 6.2 months'
supply.
    More homes are expected to go on the market next month ahead
of the summer buying season, said NAR economist Lawrence Yun.
Still, the drop in inventory of homes for sale compared with the
prior year signals it may be pinching sales.
    Sales of higher-priced homes have shown larger gains over
the past year in comparison with those properties below the
$100,000 range, the NAR said. Those homes priced above $500,000
are showing a 25 percent better pace of sale while those below
$100,000 have seen sales drop 16 percent from a year ago. 
    Meanwhile, the share of distressed sales, which also include
those where the sales price was below the amount owed on the
home, has decreased and accounted for 21 percent of home resales
last month. That was down from 25 percent a month earlier, and
was the lowest since the NAR began tracking the number in
October 2008 as the foreclosure crisis escalated.
    Distressed sales are on the decline as home prices move
upwards and supply dwindles. Many investors have snapped up
properties at deep discounts since the housing bubble burst,
taking advantage of cheap borrowing costs and affordable prices.
    U.S. mortgage rates slipped last week for the third straight
week, according to Freddie Mac. Rates for 30-year fixed
mortgages fell to 3.41 percent in the week ended April 18, down
from 3.43 percent a week earlier. 
    The slowdown in activity is coupled with new home
construction picking up 7.0 percent in March to a 1.04
million-unit annual rate, the highest since 2008, the Commerce
Department said last week.
    However, the rise in starts was driven by the volatile
multi-family sector and permits for future construction projects
fell 3.9 percent.
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