Home Sales, Prices Fall In April

The April existing home sales report from the National Association of Realtors contains very few surprises, except that sales were even worse than expected.

The trade group reports home sales fell 0.8 percent in April from a downwardly revised March, and were down 12.9 percent from April 2010.

Once again, buyers with cash were a big part of the results, but not quit as big as in March, when 35 percent of buyers paid with cash. In April, 31 percent of buyers didn't bother getting a mortgage.

Price decline

The median sale price also dropped in April, to $163,700 from $172,300 a year earlier. However, that doesn't necessarily mean all homes are going down in price. It simply means, of the homes that sold last month, more were in the lower price range.

Distressed homes – typically sold at a discount of about 20 percent – accounted for 37 percent of sales in April, down from 40 percent in March. They were 33 percent in April 2010.

“Given the great affordability conditions, job creation and pent-up demand, home sales should be stronger,” said Lawrence Yun, NAR chief economist. “Although existing-home sales are expected to trend up unevenly through next year, unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations.”

Frustration with lenders

Realtors have expressed growing frustration with the nation's lenders, saying their tight standards are preventing many would-be buyers from entering the market.

“Although sales are clearly up from the cyclical lows of last summer, home sales are being held back 15 to 20 percent due to the very restrictive loan underwriting standards,” Yun said.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the lending community needs to return to sensible standards.

“We want to ensure that qualified buyers will be able to own their property on a sustained basis from a sound credit evaluation, but banks needn’t be so stingy as to only lend to those with the highest credit scores,” he said.

In a separate report, NAR said 11 percent of Realtors reported a contract was canceled in April from an appraisal coming in below the price negotiated between a buyer and seller, 10 percent had a contract delayed, and 14 percent said a contract was renegotiated to a lower sales price as a result of a low appraisal.