Purchases in the largest sector of the U.S. housing market unexpectedly fell in April blunting the argument that low mortgage rates and plentiful jobs are promoting home sales.
Sales of existing homes dropped 3.3 percent to an annual rate of 5.04 million units, according to the National Association of Realtors. Analysts in the Reuters survey had forecast a small gain to 5.24 million homes. The March sales pace was revised higher to 5.21 million from 5.19 million and was the highest selling rate since August 2013.
The setback highlights what has been an uneven recovery from the nadir in July 2010 of 3.45 million units. In three years sales moved to the post-recession peak of 5.31 million units in July 2013 but that was followed by a sharp decline to 4.66 million in February of the next year.
The variation in home sales mirrors the change in mortgage rates. As rates on a 30-year fixed mortgage declined from 4.99 percent in December 2010 to 3.43 percent in April 2013, existing home sales rose from 4.27 million to 5.06 million. Mortgage costs peaked in December 2013 at 4.54 percent with sales at 4.86 million and have since fallen to 3.91 percent as of yesterday according to bankrate.com.
Job creation in 2014 was the best in 15 years averaging 260,000 new position a month. This year the average has been 194,000 through April.
The number of homes listed for sale last month rose 0.9 percent in April to 2.21 million, pushing the supply to 5.3 months at the current selling pace from 4.6 months in March. The median purchase price was 8.9 percent higher on the year at $219,400.
Chief Market Strategist
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