NWS News Corporation

WASHINGTON—Sales of existing homes rose in April for the second straight month, as housing demand firms alongside steady job growth and historically low interest rates.

Sales rose 1.7% in April from the prior month to a seasonally adjusted annual rate of 5.45 million, the National Association of Realtors said Friday. Economists surveyed by The Wall Street Journal had expected sales would rise 1.3% to a rate of 5.40 million in April.

April's uptick follows a choppy first quarter that saw sales tumble in February then partially recover in March. Despite healthy job growth, wage increases haven't been keeping pace with home price appreciation in many desirable markets, stymieing some first-time home buyers and those at the lower end of the market.

But demand continues to grow, especially in more affordable regions like the Midwest. Across the U.S., April's sales were 6.0% higher than April a year ago. March's sales pace was revised up slightly to 5.36 million.

The NAR said there were 2.14 million existing homes available for sale at the end of April, up 9.2% from March as sellers put their homes on the market for the spring selling season. But compared with April a year ago, inventory was down 3.6% from April a year ago. That is a 4.7-month supply at the current sales pace.

"Tight inventory conditions still persist," said Lawrence Yun, NAR's chief economist, noting the short supply has pushed up prices and led to affordability issues.

Existing homes make up roughly 90% of the housing market. In 2015, existing-home sales came in at a pace of 5.25 million, according to NAR, the highest level since 2006.

The pace of sales has since picked up over the first quarter, putting 2016 on track for an even better year. NAR predicts the pace of existing-home sales to rise 3% this year to 5.41 million.

That is despite steady price increases. The national median sale price for a previously owned home last month was $232,500, up 6.3% from a year earlier, marking the 50th straight month of year-over-year gains. Mr. Yun noted that pace of price increase is far faster than the pace of most workers' wage growth.

The Midwest had the strongest gain in sales in April, up a seasonally adjusted 12.1% from the prior month, which Mr. Yun said was due to it being the most affordable region in the country. Sales edged up in the Northeast from the prior month, and dropped in the West and South.

The housing sector has been showing signs of stabilizing in recent weeks. Housing starts rebounded in April, the Commerce Department said Tuesday, and figures for the first quarter were revised upwards. Nearly a million new units are under construction, according to the Commerce Department, which should eventually provide some relief to the tight inventory picture. But sales of newly built homes fell for the third straight month in March, the Commerce Department said last month.

A gauge of home builder sentiment remains positive, but hasn't shown signs of improvement in four months, hovering at 58 in May, its lowest level since May 2015, the National Association of Homebuilders said on Monday. That is still an upbeat figure, but follows eight months of readings above 60.

News Corp, owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors.

Write to Josh Mitchell at joshua.mitchell@wsj.com and Anna Louie Sussman at anna.sussman@wsj.com

(END) Dow Jones Newswires

May 20, 2016 10:45 ET (14:45 GMT)

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