EXISTING-HOME SALES FALL 2%; INVENTORIES AT AN EIGHT-YEAR HIGH

Sales of existing homes fell 2% in April to a seasonally adjusted annual rate of 6.76 million, the National Association of Realtors said Thursday.

The decline was close to the 6.74 million expected by economists surveyed by MarketWatch.

Inventories rose by 5.8% to 3.38 million homes for sale, a 6-month supply at the April sales pace. It's the largest supply relative to sales since January 1998.

The median sales price rose 4.2% in the past year to $223,000, the lowest price gain since September 2001. Read the full release from NAR.

The housing market peaked in August, said David Lereah, chief economist for the real estate group. "This may be the bottom. It appears May is a little better."

Sales of existing homes are down 5.7% year-over-year.

On Wednesday, the Commerce Department said sales of new homes rose unexpectedly to 1.20 million in April.

"We are now experiencing normal market conditions across most of the country," said Thomas Stevens, a builder from Vienna, Va., who is president of the real estate group.

Half of the country is cooling and half is heating up, Lereah said. Florida, California and Arizona are cooling, with inventories building up and prices beginning to fall. On the other hand, markets in Texas, the Carolinas, Ohio, Utah and New Mexico are gaining momentum.

Lereah continued to predict a soft landing for housing, but cautioned that the market is at a "delicate juncture." His group is closely watching inventories in the rapidly cooling markets.
Condo sales fell 2.7% in April to a seasonally adjusted annual rate of 839,000. Sales of single-family homes dropped 2% to 5.92 million annualized.

The Federal Reserve is watching data such as the housing figures for signs that its 16 consecutive interest rate hikes are cooling the economy enough to whip inflation. The Fed is considering at least a pause in rate hikes at the June meeting. Markets and economists are giving odds of about 50-50 that the Fed will pause.

Housing is slowing because of rising mortgage rates and falling affordability. Mortgage rates averaged 6.51% in April, up from 6.32% in March and 6.25% in February.

Housing has been a major contributor to the U.S. economic expansion of the past four years. Ultra low interest rates fueled a housing boom that boosted construction and employment in real estate and mortgage banking. Consumers were able to tap hundreds of billions of dollars of home equity, allowing them to keep spending despite stagnant incomes.

By Rex Nutting From Marketwatch