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Existing-Home Sales Flat, But Price Gains Ramp Up

Existing-home sales continued to move sideways in March, but prices rose at their fastest pace in years, as inventory remained low, the National Association of Realtors said Monday.

Home resales dipped 0.6% vs. a downwardly revised February to an annual rate of 4.92 million units. Economists expected 5.03 million.

March sales were the lowest in five months, but overall transactions have been little changed over that time. They were still 10.3% higher than a year earlier.

Median home prices swelled 11.8% to $184,300, the biggest year-over-year gain since November 2005. That reflects in large part tight inventory of homes. But those higher values appear to be spurring more owners to put their homes and condos on the market.

Prices Spur Supply The inventory of existing homes for sale rose to 1.93 million from January's longtime low of 1.77 million. The supply of homes at the current sales pace is 4.7 months vs. 4.3 months in January, but that is far below the year-ago average of 6.2 months.

"With more people seeing that they just might be able to sell their homes for a decent price, I expect that the number of houses being listed should continue to increase," said Joel Naroff, president of Naroff Economic Advisors, in a statement.

The Federal Reserve's ultra-easy policies have pushed down interest rates to record lows, making homes far more affordable. Meanwhile, modest job growth is providing some support to underlying demand.

Those supply and demand factors also have helped buoy homebuilders. NVR Inc. (NVR) on Monday reported first-quarter earnings of $6.84 a share, 75% above a year earlier. But that was well below forecasts for $8.05. Homebuilding revenue of $90 million also fell well shy of forecasts. Orders grew just 11%, while the cancellation rate rose sharply to 13%.

NVR shares fell nearly 10% early on the stock market Monday but closed down just 2%.

Ryland (RYL), Meritage (MTH) and PulteGroup (PHM) all rose about 2%. The three builders report quarterly results later this week.

The National Association of Home Builders' sentiment gauge fell in April, its third straight monthly decline.

That may reflect smaller construction firms' struggles to buy land and obtain financing. The larger, publicly traded homebuilders have fared better, with many able to bolster their land holdings during the bust.

New-Home Sales On Tuesday, the Commerce Department will report new-home sales figures for March.

With existing-home supply still tight, economists expect Tuesday's new-home sales report to show a 1.9% gain to an annualized 419,000 units in March. That would be a 19% year-over-year increase.

Distressed homes — foreclosures and short sales — were 21% of March existing-home sales, the lowest since NAR began tracking the figure in October 2008. That's down from 25% in February and 29% a year earlier.

That's helping lift median prices by reducing supply, especially at the low end.

Sales of homes more than $500,000 leapt 25% vs. a year earlier, while those less than $100,000 fell 16%.