Home sales rose in April, during what traditionally is the busiest time of the year for the nation’s real estate agents — the spring selling season. The National Association of Realtors (NAR) reported a 1.7 percent uptick in sales of existing homes, compared with March — and a jump of 6 percent from 12 months earlier.

Sales were especially strong in the Midwest, the most affordable region, which helped offset weak sales in California and other western states, according to Lawrence Yun, NAR’s chief economist.

“Except for in the West — where supply shortages and stark price growth are hampering buyers the most — sales are meaningfully higher than a year ago in much of the country,” he said.

There’s strong demand for homes, according to Budge Huskey, CEO of Coldwell Banker Real Estate LLC, thanks to improving economic fundamentals.

“We still look at new household formation, which is returning to the direction we would like to see,” he said.

Younger Americans have picked up the pace of their purchases, slightly, to a 32 percent market share, said Huskey, up from 30 percent earlier this year, but still far below the historic norm of about 40 percent.

But, said Huskey, “Prices are becoming an impediment for moderate income buyers.”

Home builders weighing in

Buyers do have more homes to choose from, even if they are more expensive. Inventories rose in April to a 4.7 month supply at the current rate of sales, still tight, but up from 4.4 months in March. Looking ahead, it’s helpful that new home construction, which frees up existing homes for sale, picked up — after being flat the first part of the year.

Development opportunities for home building have been limited for several years by three factors, according to Robert Dietz, the chief economist for the National Association of Homebuilders (NAHB). The main issue is a labor shortage. Skilled laborers left construction work during the housing bust, many aging out of the industry or finding jobs in other fields.

There’s also a shortage of building lots ready for construction. It takes developers time and money to get the permits, obtain the financing, and develop the infrastructure to prepare raw land and turn it into lots ready to be built on.

“Smaller builders are saying, ‘I know there’s demand but I don’t have finished lots,'” said Dietz. “[This lack] may surpass labor as the top supply-side headwind this year.”

Builders also still face tight lending conditions.

That adds up to less-than-robust new home construction, which affects existing home sales because homeowners make up 70 percent of new home buyers, said Dietz.

“Move up home buyers aren’t exiting their existing homes, which would free them up for sale,” said Huskey.

Home prices driven up

With available homes still in short supply, home prices have ramped up steadily. The national median hit about $232,500 in May, up 6.3 percent compared with April 2015. Prices are growing at a much faster rate than wages, which grew less than 2 percent over the 12 months ended March 31, according to Bureau of Labor Statistics data.

“For a healthy market, there needs to be rough parity between wage gains and home price increases,” said Huskey.

What continues to help affordability is historically low financing costs. Mortgage rates for a 30-year fixed loan averaged about 3.6 percent in April, saving the average mortgage borrower hundreds of dollars a month compared with historical costs of financing.

Midwest the best

Home sales jumped 12.1 percent in the heartland, compared with March, and home prices spiked as well. Northeast markets showed the most strength. The sales jump from February was more than 11 percent in March, compared with a year earlier. Midwestern sales grew 9.8 percent; the South recorded a 2.7 percent rise; and Western region sales inched up 1.8 percent.

Source: National Association of Realtors