May 22 (Bloomberg) -- Sales of previously owned U.S. homes climbed in April to the highest level in more than three years even as the market remained constrained by a lack of inventory and strict borrowing rules.
Purchases of existing houses increased 0.6 percent to an annual rate of 4.97 million, the most since November 2009, the National Association of Realtors reported today in Washington. The median price rose 11 percent compared with April 2012, the fifth consecutive month that property values advanced more than 10 percent year over year.
The fewest number of homes for sale in more than a decade, lingering lender aversion to housing debt and conservative appraisals are probably preventing the market from making bigger strides. Federal Reserve Chairman Ben S. Bernanke today said policy makers are aware that a jump in interest rates may derail the expansion, a signal central bankers will continue to hold borrowing costs down.
“Housing can still be improved,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who correctly forecast the gain in sales. “There are some problems with people closing,” Jones said. “There are more sales in the pipeline.”
Bernanke said in testimony before Congress that the economy remains hampered by high unemployment and government spending cuts, and tightening policy too soon would endanger the recovery.
“A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further,” Bernanke said. Monetary policy is providing “significant benefits,” he said.
Many Fed officials said more progress in the labor market is needed before deciding to slow the pace of asset purchases, according to minutes of their last meeting also issued today.
Stocks fell, erasing an early rally, as concern grew the Fed will scale back its stimulus efforts if the labor market continues to improve. The Standard & Poor’s 500 Index decreased 0.8 percent to 1,655.35 at the close in in New York. The S&P Supercomposite Homebuilding Index dropped 0.6 percent.
Central bankers around the world are pushing for additional stimulus to spur their economies. A report today showed U.K. retail sales unexpectedly fell in April, indicating continued weakness in consumer spending. Bank of England Governor Mervyn King and two other Monetary Policy Committee members said slack in the labor market supports the case to increase bond purchases, according to the minutes of their May meeting published today.
Bank of Japan Governor Haruhiko Kuroda today pledged to adjust the central bank’s unprecedented stimulus program as needed after bond yields jumped.
The median forecast of 79 economists surveyed by Bloomberg called for U.S. sales of existing homes to pick up to a 4.99 million pace. Estimates ranged from 4.85 million to 5.1 million. The prior month’s pace was revised to 4.94 million from a previously reported 4.92 million.
At Ryland Group Inc., the builder based in West Lake Village, California, sales are up in all markets and the company reported a first-quarter profit for the first time in six years, President and Chief Executive Officer Larry Nicholson said.
“It’s tough to find any negatives really,” Nicholson said at a May 21 conference. “The industry is obviously in recovery mode. Everything is moving in a positive direction.”
The median price of an existing home climbed to $192,800 last month, the highest since August 2008, from $173,700 a year earlier, today’s report showed.
“The price increase at double digits is not healthy because incomes are rising at less than 2 percent,” NAR Chief Economist Lawrence Yun said at a news conference as the figures were released. “We do need to moderate the price growth. The only way for that to occur is for more supply to come on to the market.”
Sales of newly built houses picked up to a 425,000 annualized rate, a three-month high, according to the median forecast in a Bloomberg survey of economists ahead of a Commerce Department report tomorrow.
The number of properties on the market climbed to 2.16 million in April, up 11.9 percent from the prior month. Nonetheless, is it was the smallest inventory for any April -- a month when housing stock typically jumps as families prepare to move before the next school year -- since 2001.
The lack of supply is overshadowing other developments that point to a pickup in demand. The median number of days a house was on the before it sold dropped to 46 in April from 62 the prior month, Yun said. That is the least since the agents’ group began tracking the data in May 2011, and compares to an average of about 90 days, he said.
Foreclosures and other distressed sales accounted for 18 percent of the total, the lowest share in data going back to October 2008. First-time buyers accounted for 29 percent of purchases last month, the lowest share in more than two years.
Purchases advanced in three of four regions, led by a 2 percent gain in the South. Demand decreased 3.4 percent in the Midwest.
Existing-home sales are recovering after reaching a 13-year low of 4.11 million in 2008. The market peaked at a record 7.08 million in 2005. The effects are rippling through the economy to give a boost to retailers including Home Depot Inc., builders, real estate brokers, mortgage lenders and household finances.
Atlanta-based Home Depot, the largest home-improvement retailer in the U.S., yesterday posted first-quarter profit that topped analyst estimates. The retailer had about 337.1 million transactions in the quarter, up 2.5 percent from a year earlier.
The average fixed rate on a 30-year loan was 3.51 percent in the week ended May 16, down from 3.79 percent a year ago, according to McLean, Virginia-based Freddie Mac. It reached a record low of 3.31 percent in November.
“Increased housing activity is fostering job creation in construction and related industries, such as real estate brokerage and home furnishings, while higher home prices are bolstering household finances, which helps support the growth of private consumption,” Bernanke said in testimony to the Joint Economic Committee of Congress.
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