Bolstered by big gains in the Northeast and Midwest, existing-home sales bounced back in March and remained slightly up from a year ago, according to the National Association of REALTORS®.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 5.1 percent to a seasonally adjusted annual rate of 5.33 million in March from a downwardly revised 5.07 million in February. Sales rose in all four major regions last month and are up modestly (1.5 percent) from March 2015.
Lawrence Yun, NAR chief economist, says home sales had a nice rebound in March following February’s uncharacteristically large decline. “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,” he says. “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.”
The median existing-home price for all housing types in March was $222,700, up 5.7 percent from March 2015 ($210,700). March’s price increase marks the 49th consecutive month of year-over-year gains.
Total housing inventory at the end of March increased 5.9 percent to 1.98 million existing homes available for sale, but is still 1.5 percent lower than a year ago (2.01 million). Unsold inventory is at a 4.5-month supply at the current sales pace, up from 4.4 months in February.
“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,” adds 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.”
Matching the lowest share since August 2015, properties typically stayed on the market for 47 days in March, a decrease from 59 days in February and below the 52 days in March 2015.
Short sales were on the market the longest at a median of 120 days in March, while foreclosures sold in 50 days and non-distressed homes took 46 days. Forty-two percent of homes sold in March were on the market for less than a month – the highest since July 2015 (43 percent).
The share of first-time buyers was 30 percent in March, unchanged both from February and a year ago. First-time buyers in all of 2015 also represented an average of 30 percent.
“The bounce back in monthly home sales was a welcome sign and more consistent with what we’re seeing on the mortgage application side,” says Quicken Loans Vice President Bill Banfield. “It’s encouraging to see the monthly gains as well as the year over year growth suggesting the housing market is seeing increased demand.”
“With rents steadily rising and average fixed rates well below 4 percent, qualified first-time buyers should be more active participants than what they are right now,” adds Yun. “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.”
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage ticked up from 3.66 percent in February to 3.69 percent in March, but remained below 4 percent for the eighth straight month. The average commitment rate for all of 2015 was 3.85 percent.
NAR President Tom Salomone says despite modest improvements, 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,” he says. “These changes would save consumers money and further strengthen the FHA’s program by enticing more creditworthy borrowers to seek out FHA-insured loans.”
All-cash sales were 25 percent of transactions in March (unchanged from February) and are up from 24 percent a year ago. Individual investors, who account for many cash sales, purchased 14 percent of homes in March, down from 18 percent in February and unchanged from a year ago. Sixty-six percent of investors paid cash in March.
Distressed sales – foreclosures and short sales – fell to 8 percent in March, down from 10 percent both last month and a year ago. Seven percent of March sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in March (17 percent in February), while short sales were discounted 10 percent (16 percent in February).
Single-family and Condo/Co-op Sales
Single-family home sales increased 5.5 percent to a seasonally adjusted annual rate of 4.76 million in March from 4.51 million in February, and are now 2.6 percent higher than the 4.64 million pace a year ago. The median existing single-family home price was $224,300 in March, up 5.8 percent from March 2015.
Existing condominium and co-op sales rose 1.8 percent to a seasonally adjusted annual rate of 570,000 units in March from 560,000 in February, but are still 6.6 percent below March 2015 (610,000 units). The median existing condo price was $209,600 in March, which is 4.6 percent above a year ago.
March existing-home sales in the Northeast ascended 11.1 percent to an annual rate of 700,000, and are now 7.7 percent above a year ago. The median price in the Northeast was $254,100, which is 5.8 percent above March 2015.
In the Midwest, existing-home sales jumped 9.8 percent to an annual rate of 1.23 million in March, and are now 0.8 percent above March 2015. The median price in the Midwest was $174,800, up 7.0 percent from a year ago.
Existing-home sales in the South rose 2.7 percent to an annual rate of 2.25 million in March, and are 2.3 percent above March 2015. The median price in the South was $194,400, up 4.6 percent from a year ago.
Existing-home sales in the West climbed 1.8 percent to an annual rate of 1.15 million in March, but are 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.
“It’s clear that spring has unleashed the pent-up demand held over from 2015,” says realtor.com® chief economist Jonathan Smoke. “This correlates to what visitors to realtor.com over the past 30 days are telling us. The majority of buyers responding to our survey questions are looking to buy within the next six months, but the biggest challenge to prospective buyers is the tight supply, and that’s why we’re seeing the age of inventory drop dramatically.”
For more information, visit www.realtor.org.