WASHINGTON — Fewer people purchased previously occupied homes in April, a troubling sign that the weak housing market remains a drag on the economy.
Sales fell 0.8 percent in April to a seasonally adjusted annual rate of 5.05 million units, the National Association of Realtors said Thursday. That's far below the 6 million homes a year that economists say represents a healthy market.
In Tampa Bay, sales of existing homes dropped last month from 2,717 to 2,590, a 4.7 percent decline from April 2010, according to Florida Realtors. The median price of existing homes fell nearly 11 percent from $136,200 to $121,400 in the same period. The median price has risen for four consecutive months, however, going from $110,000 in January to $121,400 in April.
Purchases made by first-time home buyers nationwide did increase, but not nearly enough to signal a housing recovery is on the way. First-time buyers are critical because they typically improve their properties and invest in their communities, a combination that helps home values rise.
Foreclosures, on the other hand, force prices down. They represented more than a third of all sales in April and more are expected in the months ahead.
Economists say it could be years before the housing market fully recovers.
A growing problem is that some sales that are under contract are falling apart. A separate survey from the trade group found 11 percent of Realtors said a contract was canceled because an appraisal came in below the negotiated price. And 14 percent said a contract was renegotiated to a lower price because of a low appraisal.
The median U.S. sales price in April was $163,700, down 5 percent from the same month a year ago. The median price of a new home is now nearly 31 percent higher than the median price for a previously occupied home — or twice the normal markup.
The gap is largely because of the flood of foreclosures or short sales — when the lender accepts less than what is owed on the mortgage. Those sales are forcing down prices.
Sales of homes at risk of foreclosure fell in April. But they still made up 37 percent of all purchases. And a large number of pending foreclosures are backlogged in the courts or held up by state and federal investigations into troubled foreclosure practices by lenders.
Another problem for the housing market is the glut of unsold homes. In April, the supply rose to nearly 3.9 million. At last month's sales pace, it would take more than nine months to clear those homes. Analysts say a healthy supply can be cleared in six months.
The increase in unsold inventory "should continue to weigh on prices," said Dan Greenhaus, chief economic strategist at Miller Tabak + Co.
The situation is much worse when taking into account the "shadow inventory" of homes, economists say. These are homes that are in the early stages of the foreclosure process but, because of backlogged courts or the government probes, have not hit the market for resale.