April numbers up 3.6 percent, but industry red flags abound

By NANCY SARNOFF
Copyright 2007 Houston Chronicle

After dipping in March for the first time in more than three years, Houston-area home sales snuck back up in April, relieving some concerns about a prolonged slowdown.

Sales of single-family homes were up 3.6 percent last month, compared to the same time a year ago, according to the Houston Association of Realtors. Realtors sold 5,962 single-family homes through the Multiple Listing Service. The homes mostly include existing properties, but some new ones.

“It’s encouraging to know that March’s decline did not set a trend,” said Rob Cook, HAR chairman and broker/owner of Robert D. Cook Properties. Home sales fell 8.4 percent in March, compared to 2006.

While the Realtor group remains upbeat, there are still red flags pointing to a slowdown, at least in parts of the market.

Sales of homes priced $140,000 and below were down 4.3 percent so far this year, according to the data, a possible validation of suggestions that tighter lending standards for those with poor credit will hurt home sales.

And the number of homes on the market at the end of April was up 17.6 percent compared to the year before.

The association attributes the increase to the time of the year, as more people list their homes for sale in spring.

But if the for-sale inventory continues to rise faster than sales, it could push down prices.

The median price for a single-family home — the price at which half the homes sold for more and half for less — was $150,000 in April, a monthly record and up 2 percent from the same month last year.

While sales of lower-end homes have been slowing, the upper end of the market is seeing gains. Sales in the $400,000 and up segment are up 10.6 percent so far this year, though they represent a small portion of overall sales.

The association predicts May sales will increase modestly, as pending sales at the end of last month — those listings supposed to close within 30 days — were up from last year.

But experts warn that the lower end of the market, in particular, will continue to decline.

So-called subprime lending has been reined in as foreclosures have risen, making it harder for those with spotty credit to buy homes.

And some believe that sales of foreclosed homes, which have been rising since last fall, are helping prop up the local market. Sixteen percent of the April home sales were properties that had been foreclosed on. They were up 87 percent over the previous April.