Despite a decline in February, existing-home sales bounced back better than expected in March, according to the National Association of Realtors (NAR). Home resales increased 5.1 percent to an annual rate of 5.33 million units during the month, with sales in all four major regions rising 1.5 percent from the previous year.
“Closings came back in force last month as a greater number of buyers — mostly in the Northeast and Midwest — overcame depressed inventory levels and steady price growth to close on a home,” said Lawrence Yun, NAR chief economist.
“Buyer demand remains sturdy in most areas this spring and the mid-priced market is doing quite well. However, sales are softer both at the very low and very high ends of the market because of supply limitations and affordability pressures.”
According to the National Association of Realtor’s report, the median existing-home price for all housing types — single-family homes, townhomes, condominiums and co-ops — was $222,700, up 5.7 percent from March 2015. In addition, the total housing inventory surged 5.9 percent to 1.98 million existing homes available for sale. That number is still 1.5 percent lower than a year ago, which saw housing inventory at the end of March 2015 at 2.01 million.
“The choppiness in sales activity so far this year is directly related to the unevenness in the rate of new listings coming onto the market to replace what is, for the most part, being sold rather quickly,” said Yun. “Additionally, a segment of would-be buyers at the upper end of the market appear to have been spooked by January’s stock market correction.”
March, the beginning of the spring selling season, saw properties stay on the market for 47 days–a drop from the 59 days in February. Short sales were on the market the longest at a median of 120 days, while foreclosures sold in 50 days and non-distressed homes took 46 days. All in all, 42 percent of homes sold in March were on the market for less than a month.
The average rate for a 30-year, conventional, fixed-rate mortgage remains low, but inched up from 3.66 percent in February to 3.69 percent in March. It’s the eighth consecutive month mortgage rates have remained below four percent.
The report also noted that things remained much the same for first-time homebuyers in March as in the previous year. First-time buyers represented 30 percent of existing-home sales during the month, the same percentage as March 2015. “With rents steadily rising and average fixed rates well below four percent, qualified first-time buyers should be more active participants than what they are right now,” Yun said.
“Unfortunately, the same underlying deterrents impacting their ability to buy haven’t subsided so far in 2016. Affordability and the low availability of starter homes is still a major barrier for them in most markets.”
Tom Salomone, president of National Association of Realtors, said that mortgage credit is still difficult to come by for many first-time buyers and middle-income households.
“Reducing the Federal Housing Administration’s annual mortgage insurance premium rate and repealing its life-of-loan policy requirement would certainly expand options for more of these buyers,” said Salomone.
“These changes would save consumers money and further strengthen the FHA’s program by enticing more creditworthy borrowers to seek out FHA-insured loans.”
Numbers By Region
The boost in existing-home sales for March were achieved by big gains in the Northeast and Mideast. Existing-home sales surged 11.1 percent in the Northeast to an annual rate of 700,000 in March, with a median price of $254,100. Existing-home sales in the Midwest increased 9.8 percent to an annual rate of 1.23 million in March, with a median price of $174,800.
In the South, home resales increased 2.7 percent to an annual rate of 2.25 million in Marc. The median price of a home in the South was $194,400, up 4.6 percent from the previous year. The West also saw a mediocre increase as existing-home sales rose 1.8 percent increase during March to an annual rate of 1.15 million. However, the median price in the West climbed 5.9 percent from the previous year to $320,800.
The sale of single-family homes also increased during March, rising 5.5 percent to a seasonally adjusted annual rate of 4.76 million, a 2.6 percent increase from March 2015. Home prices for existing single-family homes increased 5.8 percent to $224,300 in March. In a pale comparison, existing condominium and co-op sales increased 1.8 percent to a seasonally adjusted annual rate of 570,000 units in March. The median existing condo price in March was $209,600, a 4.6 percent increase from the previous year.