US home sales tick up to highest in 3 1/2 years

[May 23, 2013]  WASHINGTON (AP) -- Sales of previously occupied U.S. homes ticked up last month to the highest level in three and a half years, helped by a jump in the number of houses for sale.

The National Association of Realtors said Wednesday that sales rose to a seasonally adjusted annual rate of 4.97 million, up from 4.94 million in March.

Home sales have risen 9.7 percent in the past 12 months, evidence that the housing market is still improving. But sales have been roughly flat since November. The supply of available homes remains tight and many potential buyers aren't able to get loans.

The number of homes for sale rose 12 percent in April from March to 2.16 million. But inventory is still almost 14 percent lower than a year earlier.

The increase in inventories partly reflects the beginning of the spring selling season. The supply of homes would be exhausted in 5.2 months at the current sales pace. That's below the typical level of about six months.

More Americans are interested in purchasing homes: buyer traffic has risen 31 percent in the past year, the Realtors' group said.

Rising demand and tight supply has pushed up prices. The median price of a home for sale jumped 11 percent last month from April 2012 to $192,800. That's the highest in nearly five years. The median is the figure halfway between the highest and lowest number.

Higher prices could encourage more people to sell homes, fueling further sales gains.

"Sellers want to sell in a rising market," said Jonathan Basile, an economist at Credit Suisse. "When more sellers come out and sell, they'll also have to buy."

The increase in prices partly reflects more sales of higher-priced homes. Sales of lower-priced homes are rising more slowly.

And sales of cheap foreclosed properties are falling. The proportion of distressed sales has fallen sharply in the past year, to 18 percent from 28 percent in April 2012. Distressed sales include foreclosed homes and homes in which the size of the mortgage exceeds the home's value.

But first-time buyers made up only 29 percent of sales last month, the lowest proportion in more than two years.

That's well below the 40 percent typical in a healthy market and down from 35 percent a year ago. First-time buyers usually help drive healthy markets. They purchase from existing homeowners, who then are able to move on to larger houses.

Many homes are being snapped up soon after being put on the market. Homes were on sale for a median 46 days in April, down from 62 in March. Homes are selling at a 45 percent faster pace than a year earlier.

Many of the sales are going to private investors, who are buying up lower-price homes and then renting them out.

Since the housing bubble burst more than six years ago, banks have imposed tighter credit conditions and required larger down payments. Those changes have left many would-be buyers unable to qualify for the super-low mortgage rates.

The housing recovery helped Home Depot Inc. post a big gain in first-quarter net income, the company said Tuesday. Its quarterly profits rose 18 percent. The company also raised its full-year revenue and earnings forecasts.

Rising demand and limited supply have encouraged builders to boost construction. Applications for building permits rose in April to the highest level in nearly five years. And U.S. builders started work on more new homes and apartments in April compared with the same month a year earlier.

[Associated Press; By CHRISTOPHER S. RUGABER]

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