Surging Home Sales Herald Strong Spring Market

The spring housing market blasted in across the county last month and existing home sales jumped 6.1 percent from the February level to the highest annual rate in 18 months.  The National Association of Realtors® (NAR) said March sales were at a seasonally adjusted annual rate of 5.19 million units compared to 4.89 million in February.  The rate of sales tied those in September 2013, which had been the most recent high in sales.  The March increase was the largest month-over-month gain since a +6.2 percent change in December 2010.

The pace of sales of existing single-family homes, townhomes, condominiums, and co-ops in March was 10.4 percent higher than in March 2014 and represented the sixth consecutive month of annual increases.  It was also the largest year-over-year increase since August 2013's 10.7 percent rise.

Single-family home sales rose 5.5 percent to a seasonally adjusted annual rate of 4.59 million from 4.35 million in February, and were 10.9 percent above the 4.14 million pace a year previous. Existing condominium and co-op sales increased 11.1 percent to a seasonally adjusted annual rate of 600,000 units in March from 540,000 units in February, and are now 7.1 percent higher than March 2014 (560,000 units).

Lawrence Yun, NAR chief economist, says the housing market appears to be off to an encouraging start this spring. "After a quiet start to the year, sales activity picked up greatly throughout the country in March," he said. "The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years."

The inventory of existing homes increased to 2.0 million homes for sale, a gain of 5.3 percent for the month and 2.0 percent higher than a year earlier.  The unsold inventory is estimated at a 4.6-month supply at the current sales pace, down from 4.7 months in February.

"The modest rise in housing supply at the end of the month despite the strong growth in sales is a welcoming sign," adds Yun. "For sales to build upon their current pace, homeowners will increasingly need to be confident in their ability to sell their home while having enough time and choices to upgrade or downsize. More listings and new home construction are still needed to tame price growth and provide more opportunity for first-time buyers to enter the market."

The median existing-home price for all homes in March was 7.8 percent higher than in March 2014 at $212,100.  The month was the 37th consecutive one in which annual prices increased and the change was the largest since an 8.8 percent year-over-year gain in February 2014.  The median existing single-family home price was $213,500, up 8.7 percent from March 2014 and the median condo price was 1.6 percent higher at $201,400.

Foreclosures made up 7 percent of sales during the month and 3 percent were short sales.  Total distressed sales accounted for 11 percent of all sales in February and 14 percent in March 2014.  Foreclosures sold for an average discount of 16 percent below market value in March while short sales were also discounted 16 percent.

For the third time in 12 months the share of first-time buyers broke through 30 percent, rising to that exact number in March from 29 percent in February. Investors purchased 14 percent of homes sold in both February and March but this was down from 17 percent in March 2014.  Seventy percent of investors paid cash for the homes they purchased during the month and total cash sales accounted for 24 percent of all transactions, down from 26 percent in February and 33 percent the previous March. 

Properties typically stayed on the market for a shorter time period in March (52 days) compared to February (62 days), and are also selling slightly faster than a year ago (55 days). Short sales were on the market the longest at a median of 165 days in March, while foreclosures sold in 56 days and non-distressed homes took 51 days. Forty percent of homes sold in March were on the market for less than a month.

Regional sales also boomed in March.  Sales in the Northeast increased 6.9 percent to an annual rate of 620,000, and were 1.6 percent above a year ago.  Prices however eased with the median down 1.6 percent from a year earlier to $240,500.

In the Midwest, existing-home sales jumped 10.1 percent to an annual rate of 1.20 million in March, and were 12.1 percent above March 2014. The median price in the Midwest was $163,600, up 9.7 percent from a year ago.

Existing-home sales in the South climbed 3.8 percent to an annual rate of 2.19 million in March, and were 11.7 percent above March 2014. The median price in the South was $187,900 an annual increase of 9.3 percent.

Existing-home sales in the West rose 6.3 percent to an annual rate of 1.18 million in March, and 11.3 percent compared to the prior year. The median price in the West gained 8.3 percent to $305,000.