Existing home sales are projected to fall between seasonally adjusted annual rates of 5.15 and 5.47 million annually with a target of 5.31 million during April, according to Auction.com's April 2015 Real Estate Nowcast released Wednesday.
April's target annual sales rate for existing homes of 5.31 million is an increase of 2.3 percent from March and 11.8 percent from April 2014, according to Auction.com.
"Among the factors contributing to the jump in March's existing home sales, pent-up demand from weak sales in January and February probably played a significant role," Auction.com EVP Rick Sharga said. "Consumer psychology is likely also at play here: with talk of the Fed hiking interest rates as early as June, buyers who've been sitting on the sidelines may have decided to buy now and lock in today's historically low interest rates."
Sharga also noted that while the 5.31 million target number for April is up both month-over-month and year-over-year, a truly healthy housing market would be on a pace for about six million in existing home sales annually. He said the annual rate of existing home sales will probably continue at about the five million range for the next year.
Regarding the housing market this spring, Tim Rood, Chairman of the Washington, D.C.-based Collingwood Group and former Fannie Mae executive, told Dirk Van on Westwood One's "Radio Light" program that the market “seems to be moving in the right direction. We were concerned coming in to this spring buying season that we were at a bit of an inflection point or tipping point. As we saw things continue to kind of lament and slow down than there was a great risk that we would fall back and have kind of an echo housing drop but it looks like we are still moving forward.” Click here to hear Van's interview with Rood.
April's Auction.com Nowcast indicates that existing home prices will fall in the range of $201,052 to $222,215 for the month. The targeted price of $211,633 is up by 5 percent from April 2014. The announcement from Auction.com noted that the existing home sales data for March released Wednesday by the National Association of Realtors (NAR) found that both the annual rate of existing home sales for March (5.19 million) and the existing home price for March ($212,100) were within the ranges for March that Auction.com predicted a month ago in the Nowcast. The existing home price of $212,100 represented an increase of 7.8 percent from the previous March.
"After a quiet start to the year, sales activity picked up greatly throughout the country in March," NAR Chief Economist Lawrence Yun said. "The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years."
Recent improvements in the labor market could provide a solid foundation for further growth of the housing market, according to Auction.com Chief Economist Peter Muoio.
"Despite some wobbles in recent macroeconomic indicators, we’ve seen indications of an improved U.S. labor market, suggesting a firmer foundation for growth," Muoio said. "These indicators include not only headline employment growth and unemployment rates, but also the pace of voluntary quits, the stabilization of labor force participation and even some nascent signs of stirring wage growth. The improved labor market is an essential underlying footing for healthy home sales, and March’s results – and more broadly the green shoots of housing sales and price strength – appear to bear this out."
Auction.com's Nowcast model uses industry data, proprietary company transactional data and Google search activity data to predict market trends as they are occurring, weeks in advance of the release of other benchmark studies.