Single-family Gains Falter in April

SEATTLE—The inventory of single-family homes on the market contracted slightly in April, the fourth consecutive month it has done so, according to locally based Zillow. In separate but related news, Emeryville, CA-based ZipRealty said Wednesday that median home price growth grew just 6.1% for the year that ended in April, compared to 16.4% of year-over-year growth for April 2013.

"First-time homebuyers are ready to buy, but unfortunately, aren't able to take advantage of the spring shopping season and low mortgage rates because of the lack of homes for-sale in their price range," says Zillow's chief economist, Stan Humphries. "This shortage of inventory is driven by a couple factors, most notably by stubbornly high negative equity, particularly at the lower end of the market, which is preventing many sellers from listing their homes."

In a paper published earlier this week, John Krainer, senior economist with the Federal Reserve Bank of San Francisco, suggested other influences that may be at work in the dropoff of existing home sales over the past several months. “The fact that home sales in different parts of the country peaked and fell together suggests that some common underlying factors were at play,” he wrote. Rising mortgage interest rates were one such factor, wrote Krainer.

“Higher mortgage rates generally have a direct dampening effect on home sales, as buyers face constraints on the size of loans they can secure and on loan payments relative to their incomes,” Krainer wrote. “Since individual incomes likely did not rise over this short period, and house prices continued to grow in most regions, the rise in mortgage rates was expected to have an unambiguous negative impact on sales.”

Zillow found that national home values in April were down 0.1% compared to March, the first monthly decline in Zillow's Home Value Index for more than two years. Among the 35 largest metro areas covered by Zillow, home values in a dozen were down in April from March, and were flat in two others.

Although Zillow and ZipRealty posted different Y-O-Y figures due in part to different sample sizes, both firms said Wednesday that home values rose in the past 12 months, with Zillow reporting a 5.3% increase. The biggest gainers in ZipRealty's survey of 24 metros were Sacramento , up 20%; Las Vegas, up 17%; Orlando and Los Angeles, each up 13% Chicago, 10%; and Portland, OR, 9%.