Existing Home Sales Rise for 2nd Straight Month

Existing home sales rose in March for the second consecutive month, but continued to be hampered by low inventories and affordability constraints, the National Association of Realtors reported yesterday.

The report said total existing-home rose by 1.1 percent to a seasonally adjusted annual rate of 5.60 million in March from 5.54 million in February. Despite last month’s increase, sales are still 1.2 percent below a year ago.

Single-family home sales rose by 0.6 percent to a 4.99 million in March from 4.96 million in February, but were 1.0 percent below the 5.04 million sales pace a year ago. The median existing single-family home price rose to $252,100 in March, up 5.9 percent from a year ago. Existing condominium and co-op sales increased by 5.2 percent to 610,000 units in March, but were 3.2 percent below a year ago. The median existing condo price rose to $236,100 in March, 4.8 percent above a year ago.

Increases in the Northeast and Midwest offset declines in the South and West. Sales in the Northeast rose by 6.3 percent to an annual rate of 680,000, but were 9.3 percent below a year ago. The median price in the Northeast rose to $270,600, 3.3 percent above a year ago. Sales in the Midwest increased by 5.7 percent to 1.29 million in March, but fell by 1.5 percent below a year ago. The median price in the Midwest rose to $192,200, up 5.1 percent from a year ago.

Sales in the South decreased by 0.4 percent to 2.40 million in March, but were 0.4 percent above a year ago. The median price in the South rose to $222,400, up 5.7 percent from a year ago. Sales in the West declined by 3.1 percent to 1.23 million in March, but were 0.8 percent higher than a year ago. The median price in the West rose to $377,100, up 7.9 percent from a year ago.

“Inventories remain lean across much of the country, contributing to continued strong price appreciation,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Tight inventories continue to limit sales, with the number of homes available for sale falling 7.2 percent over the past year. The tight supply of homes has contributed to a very competitive housing market this spring. Fifty percent of the homes sold in March were on the market for less than a month, and the median price of a home sold in March was 5.8 percent higher than it was a year ago.”

Vitner noted housing data are difficult to interpret during the winter months, as activity tends to slow in the winter months each year and swings in the weather can have wide-ranging impacts on the reported numbers.

“Weather effects usually sort themselves out by mid spring,” Vitner said. “That process may take longer this year, given how harsh winter weather has stuck around a little longer than usual. Realtors generally report strong demand, and most remain more concerned about the lack of inventory than rising mortgage rates.”

NAR Chief Economist Lawrence Yun cited “challenging market conditions” in most of the country. “The unwelcoming news is that while the healthy economy is generating sustained interest in buying a home this spring, sales are lagging year ago levels because supply is woefully low and home prices keep climbing above what some would-be buyers can afford.”

NAR reported the median existing-home price for all housing types in March rose to $250,400, up 5.8 percent from a year ago ($236,600), marking the 73rd straight month of year-over-year gains. Total housing inventory at the end of March climbed by 5.7 percent to 1.67 million homes available for sale, but inventory was 7.2 percent lower than a year ago (1.80 million) and has fallen year-over-year for 34 consecutive months. Unsold inventory is at a 3.6-month supply at the current sales pace (3.8 months a year ago).

The report said properties typically stayed on the market for 30 days in March, down from 37 days in February and 34 days a year ago. Fifty percent of homes sold in March were on the market for less than a month. First-time buyers represented 30 percent of sales in March, up from 29 percent last month but down from 32 percent a year ago.

NAR said all-cash sales represented 20 percent of transactions in March, down from 24 percent in February and 23 percent a year ago. Individual investors purchased 15 percent of homes in March, unchanged from February and down from 18 percent a year ago.

Distressed sales represented 4 percent of sales in March, unchanged from February and down from 6 percent a year ago. Three percent of March sales were foreclosures; 1 percent were short sales.