Existing-Home Sales Climb in March

The number of existing-home sales increased 1.1 percent in March, marking the second consecutive month of growth. Although the gain was not exceptionally large, the boost may be an indication demand for home buying is sustainable, despite challenging market conditions.

“Robust gains last month in the Northeast and Midwest — a reversal from the weather-impacted declines seen in February — helped overall sales activity rise to its strongest pace since last November at 5.72 million,” said Lawrence Yun in a recent statement released by the National Association of Realtors® (NAR). “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.”

Total existing-home sales, which NAR defines as completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.1 percent to a seasonally adjusted annual rate of 5.60 million in March from 5.54 million in February. Although last month saw a minor increase, single-family home sales are still 1.2 percent lower than they were a year ago.

The median existing-home price for all housing types in March was $250,400, according to NAR, up 5.8 percent from March 2017 when the median price was $236,600. Last month’s price increase marks the 73rd consecutive month of year-over-year gains. As inventory stays low and demand remains strong, it’s not altogether surprising that home values have stayed on a steady upward path.

“Although the strong job market and recent tax cuts are boosting the incomes of many households, speedy price growth is squeezing overall affordability in several markets — especially those out West,” said Yun.

Total housing inventory climbed 5.7 percent to 1.67 million by the end of March. However, this is 7.2 percent lower than inventory levels at the same time last year (1.80 million). What may be more concerning is that the inventory levels have been dropping consistently — statistics are showing declines in housing inventory for 34 consecutive months.

At the time of this writing, unsold inventory was recorded at a 3.6-month supply at the current sales pace. A year ago, the supply was at 3.8 months. In a balanced market, unsold housing inventory is usually at a 6-month supply. Anything registering lower than this indicates a market where there is not enough supply to meet demand. Anything higher indicates a buyer’s market where supply outweighs demand.

Homes for sale typically stayed on the market for an average of 30 days in March. This is 37 days less than February’s figure and is 34 days less than March 2017. Worth noting is that 50 percent of homes that sold in March were on the market less than a month. This is especially worth noting for home buyers and buyers’ agents. Anyone in the market for a home this spring will likely have to compete with many other buyers and bidding wars may be commonplace.

“Realtors® throughout the country are seeing the seasonal ramp-up in buyer demand this spring but without the commensurate increase in new listings coming onto the market,” said Yun. “As a result, competition is swift and homes are going under contract in roughly a month, which is four days faster than last year and a remarkable 17 days faster than March 2016.”

A big issue facing today’s home buyers is the significant lack of entry-level properties. NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, says the extremely tight inventory in the lower price tiers of the market could put move-up buyers in exceptionally good positions. “First-time buyers continue to make up an underperforming share of the market because there are simply not enough homes for sale in their price range,” said Mendenhall. “Supply conditions improve in higher up price brackets, which means those trading up should see considerable interest in their home, as well as more listings to choose from during their own search.”

Here are a few more key takeaways and findings from the NAR report:

  • All-cash sales made up 20 percent of home sale transactions in March, down from 24 percent in February and 23 percent a year ago.
  • Existing-condominium and co-op sales increased 5.2 percent to a seasonally adjusted annual rate of 610,000 units in March; however, this is 3.2 percent below a year ago.
  • Distressed sales (foreclosures and short sales) made up 4 percent of transactions in March, unchanged from February and down from 6 percent a year ago.

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