March Existing Home Sales Jump; Homeowner Sentiment Increases

Volatility remains the key word with existing home sales. The National Association of Realtors reported existing home sales continued its roller-coaster ride, jumping 5.1 percent in March after a 7-plus percent fall in February.

Total existing home sales reached a seasonally adjusted annual rate of 5.33 million in March from a downwardly revised 5.07 million in February, NAR said. Sales rose in all four major regions last month and are up modestly (1.5 percent) from March 2015.

 The supply of existing homes increased for the third consecutive month to 4.5 months and total inventory of existing homes available for sale rose 5.9 percent to 1.98 million units. “[But] while the pickup is encouraging, supply levels remain lean,” said Wells Fargo Securities Senior Economist Mark Vitner, noting that supply remains 1.5 percent lower than a year ago.

NAR chief economist Lawrence Yun said closings “came back in force” last month as a greater number of buyers, mostly in the Northeast and the Midwest, overcame depressed inventory levels and steady price growth to close on a home. “Buyer demand remains sturdy in most areas this spring and the mid-priced market is doing quite well,” Yun said. “However, sales are softer both at the very low and very high ends of the market because of supply limitations and affordability pressures.”

March’s median existing home price for all housing types rose 5.7 percent year-over-year to $222,700, NAR reported. March’s price increase marks the 49th consecutive month of year-over-year gains.

Regionally, existing home sales in the Northeast jumped 11.1 percent to an annual rate of 700,000, nearly 8 percent above a year ago, NAR said. The median price in the Northeast was $254,100, 5.8 percent above March 2015. The Midwest also saw a significant jump as existing home sales increased 9.8 percent to an annual rate of 1.23 million, 0.8 percent above March 2015. The median price in the Midwest was $174,800, up 7.0 percent from a year ago.

NAR said existing home sales in the South rose 2.7 percent to an annual rate of 2.25 million in March, 2.3 percent above year-ago levels. The median price in the South was $194,400, up 4.6 percent from a year ago. Sales in the West climbed a modest 1.8 percent to an annual rate of 1.15 million in March, 2.5 percent lower than a year ago. The median price in the West was $320,800, which is 5.9 percent above March 2015.

Current and prospective homeowners are increasingly optimistic about U.S. real estate, Berkshire Hathaway HomeServices’ latest Homeowner Sentiment Survey said yesterday. Respondents cited low interest rates, an improving economy and increasing housing inventory as key reasons for their growing optimism.

Reversing downward trends for the past two surveys, 61 percent of current homeowners and 65 percent of prospective homeowners now see the real estate market as more favorable for both sellers and buyers, Berkshire Hathaway HomeServices said. More than three-quarters of prospective homeowners–a survey group composed mainly of Millennials and Gen-Xers–said this year is a better time to buy a home. That represents an 11-point jump from the December survey.

“Millennials are increasingly interested in homeownership and its virtues,” said Gino Blefari, CEO of Berkshire Hathaway HomeServices parent company HSF Affiliates. “They understand that mortgage rates are still low, the economy and jobs pictures look good and that housing remains a fundamental, long-term investment. Opportunity is opportunity, no matter your demographic.”

Berkshire Hathaway HomeServices President Stephen Phillips said the firm sees a “high probability” that mortgage rates will remain low for the foreseeable future. “The Federal Reserve will act responsibly with future rate increases yet, to a degree, its hands are tied by the shaky state of the global economy,” he said. “Aggressive tightening would not only choke progress in the U.S. economy, but would also impact foreign economies that continue to seek stability.”