* Existing home sales drop 2.3 percent in April
* Housing inventory falls 9.0 percent from year ago
* Median house price rises 6.0 percent year-on-year
WASHINGTON, May 24 U.S. home resales fell more
than expected in April, weighed down by a chronic shortage of
houses on the market that is keeping house prices elevated and
sidelining prospective buyers.
The National Association of Realtors said on Wednesday
existing home sales declined 2.3 percent to a seasonally
adjusted annual rate of 5.57 million units last month.
Despite the decline, April's sales pace was the fourth
highest over the past 12 months. March's sales pace was revised
down to 5.70 million units, which was still the highest level
since February 2007, from the previously reported 5.71 million
"Lack of supply moving through the seasonal ramp-up in sales
in the spring selling season slowed sales rather than demand,"
said Ted Wieseman, an economist at Morgan Stanley in New York.
Economists had forecast sales falling 1.1 percent to a 5.65
million-unit rate. Sales were up 1.6 percent from April 2016,
also underscoring the housing market's underlying strength.
While the number of homes on the market rose 7.2 percent to
1.93 million units from March, supply was down 9.0 percent from
a year ago. Housing inventory has dropped for 23 straight months
on a year-on-year basis.
As a result, the median house price increased 6.0 percent
from a year ago to $244,800 in April, the highest level since
June 2016. That was the 62nd straight month of year-on-year
With recent data showing a drop in homebuilding and a plunge
in new home sales in April, weak home resales suggest
residential investment will probably make a small contribution
to gross domestic product in the second quarter.
Residential investment added half a percentage point to the
economy's 0.7 percent annualized growth pace in the first
U.S. financial markets were little moved by the report as
investors awaited minutes of the Federal Reserve's May policy
meeting later on Wednesday.
Houses typically stayed on the market for 29 days last
month, the shortest period since the NAR started tracking the
series in May 2011. That was down from 34 days in March and 39
days a year ago.
Demand for housing is being driven by a tight labor market,
marked by a 4.4 percent unemployment rate, which is boosting
employment opportunities for young Americans.
The housing market also remains supported by historically
low mortgage rates, with the 30-year fixed mortgage rate
hovering just above 4.0 percent. But rising building material
costs as well as shortages of lots and labor have left builders
struggling to fill the inventory gap.
The NAR estimates housing starts and completions should be
in a range of 1.5 million to 1.6 million units to eliminate the
persistent shortage. Housing starts are running at about a rate
of 1.2 million units and completions around a pace of 1 million
A separate report from the Mortgage Bankers Association on
Wednesday showed applications for loans to purchase homes fell
1.0 percent last week.
Last month, sales fell in the Northeast, West and South
regions, but rose in the Midwest.
At April's sales pace, it would take 4.2 months to clear
the stock of houses on the market, up from 3.8 months in
March. A six-month supply is viewed as a healthy balance
between supply and demand.
First-time buyers accounted for 34 percent of transactions
last month, still well below the 40 percent share that
economists and realtors say is needed for a robust housing
market, but up from 32 percent a year ago.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)