March Existing Home Sales Rebound to 10-Year High

Existing home sales, which disappointed in February, rebounded in March to their highest level in more than 10 years, the National Association of Realtors reported Friday.

NAR said total existing home sales rose by 4.4 percent to a seasonally adjusted annual rate of 5.71 million in March from a downwardly revised 5.47 million in February. March’s sales improved by 5.9 percent from a year ago and surpassed January as the strongest month of sales since February 2007 (5.79 million).

Single-family home sales rose by 4.3 percent to 5.08 million in March from 4.87 million in February and improved by 6.1 percent from a year ago. The median existing single-family home price rose to $237,800 in March, up 6.6 percent from a year ago.

Existing condominium and co-op sales increased by 5.0 percent to 630,000 units in March, and improved by 5.0 percent from a year ago. The median existing condo price rose to $224,700 in March, 8.0 percent higher than a year ago.

Regionally, only the West saw a dip, falling by 1.6 percent to 1.22 million in March, but remained 5.2 percent above a year ago. The median price in the West rose $347,500, up 8.0 percent from a year ago.

Sales in the South rose by 3.4 percent in March to 2.42 million and improved by 8.5 percent from a year ago. The median price in the South rose to $210,600, up 8.6 percent from a year ago.

Sales in the Northeast surged by 10.1 percent to 760,000 and improved by 4.1 percent from a year ago. The median price in the Northeast rose to $260,800, 2.8 percent above March 2016.

In the Midwest, sales jumped by 9.2 percent to 1.31 million in March and improved by 3.1 percent from a year ago. The median price in the Midwest rose to $183,000, up 6.2 percent from a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. noted even though existing home sales came in stronger than anticipated, inventories remain tight and have helped to push prices up 7 percent over the past year, pressuring affordability.

“A relatively warm January and February, however, likely helped to propel pending home sales early in the year and suggest some risk to sales early in the second quarter,” Vitner said. “Heading into the key spring buying season, inventories remain exceptionally lean. As is typical for March, inventories rose last month, but are down 6.6 percent over the past year. The stronger pace of sales last month kept the supply of existing homes at 3.8 months, well below the 5.5 month supply considered a balanced market.”

But Cheryl Young, senior economist with Trulia, San Francisco, said promising economic conditions such as decreasing unemployment drove the strong existing home sales rate despite low inventory, demonstrating high demand in the face of rising prices and low supply.

“The first quarter of 2017 shows strong start to home buying season,” Young said. “While inventory remains low, the pace of existing home sales is relatively steady…These promising numbers bode well for this rest of home buying season, showing that demand remains high despite the headwinds in the market.”

NAR Chief Economist Lawrence Yun said early returns so far this spring buying season look very “promising,” as a rising number of households dipped their toes into the market and were successfully able to close on a home last month. “Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does.”

NAR reported the median existing-home price for all housing types in March rose to $236,400, up 6.8 percent from a year ago ($221,400). March’s price increase marked the 61st consecutive month of year-over-year gains.

Total housing inventory at the end of March increased by 5.8 percent to 1.83 million existing homes available for sale, but is still 6.6 percent lower than a year ago (1.96 million) and has fallen year-over-year for 22 straight months. Unsold inventory is at a 3.8-month supply at the current sales pace (unchanged from February).

The report said properties typically stayed on the market for 34 days in March, down from 45 days in February and 47 days a year ago. Short sales were on the market the longest at a median of 90 days in March, while foreclosures sold in 52 days and non-distressed homes took 32 days (shortest since NAR began tracking in May 2011). Forty-eight percent of homes sold in March were on the market for less than a month.

NAR said first-time buyers represented 32 percent of sales in March, unchanged from February and up from 30 percent a year ago. All-cash sales represented 23 percent of transactions in March, down from 27 percent in February and 25 percent a year ago. Individual investors purchased 15 percent of homes in March, down from 17 percent in February but up from 14 percent a year ago. Sixty-three percent of investors paid in cash in March.

Distressed sales represented 6 percent of sales in March, down from 7 percent in February and 8 percent a year ago. Five percent of March sales were foreclosures; 1 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in March (18 percent in February), while short sales were discounted 14 percent (17 percent in February).