Existing Home Sales Highest Since 2007
Sales of existing homes roared back in March after suffering an unexpected setback in February. The National Association of Realtors® (NAR) said sales of existing single-family houses, townhouses, condominiums, and cooperative apartments were at a seasonally adjusted annual rate of 5.71 million, an increase of 4.4 percent from the downwardly adjusted February number of 5.47 million (from 5.48 million).
The March results were toward the high end of analysts' estimates. Those polled by Econoday were looking for sales in the range of 5.49 to 5.80 million units with a consensus of 5.61 million.
The pace of sales was up 5.9 percent from that of last March and surpasses this past January to become the best month for sales since February 2007. Sales then were at the rate of 5.79 million units.
Sales of single-family homes rose 4.3 percent to a seasonally adjusted annual rate of 5.08 million from 4.87 in February, putting those sales 6.1 percent higher than during the same month in 2016. Condo sales were also up, rising 5.0 percent to a seasonally adjusted annual rate of 630,000 units, a 5.0 percent annual gain.
Lawrence Yun, NAR chief economist, says the strong sales during the month were led by hefty gains in the Northeast and Midwest. "The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market and were successfully able to close on a home last month," he said. "Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does."
The median existing-home price for all housing types in March was $236,400, up 6.8 percent from the March 2016 median of $221,400. March's price increase marks the 61st consecutive month of year-over-year gains. The median existing single-family home price was $237,800 in March, up 6.6 percent on an annual basis and the median condo price was up 8.0 percent to $224,700.
Yun continued, "Bolstered by strong consumer confidence and underlying demand, home sales are up convincingly from a year ago nationally and in all four major regions despite the fact that buying a home has gotten more expensive over the past year."
There was some expansion of housing inventory from February. Total available existing homes for sale rose 5.8 percent to 1.83 million units but that was still down 6.6 percent from the March 2016 level. Available listings represented a 3.8-month supply at the current rate of sales, unchanged from February. Inventory has fallen year-over-year for 22 straight months.
NAR said the tight inventories led to shortened marketing time. Properties typically stayed on the market for 34 days in March, which is down significantly from 45 days in February and 47 days a year ago. Short sales were on the market the longest at a median of 90 days, while foreclosures sold in 52 days and non-distressed homes took 32 days, the shortest since NAR began tracking them in May 2011. Forty-eight percent of homes sold in March were on the market for less than a month.
"Last month's swift price gains and the remarkably short time a home was on the market are directly the result of the homebuilding industry's struggle to meet the dire need for more new homes," said Yun. "A growing pool of all types of buyers is competing for the lackluster amount of existing homes on the market. Until we see significant and sustained multi-month increases in housing starts, prices will continue to far outpace incomes and put pressure on those trying to buy."
The share of homes sold to first-time buyers remained unchanged from February at 32 percent, which is up 2 percentage points from a year ago. The share averaged 35 percent for all of 2016.
NAR President William E. Brown says patience is virtue for prospective first-time buyers this spring. "Realtors in most markets are saying interest from first-timers is up this year, but competition is stiff for listings in their price range." He advised buyers not to get frustrated by losing out on a home and "know the right one will eventually come along in due time."
Individual investors accounted for 15 percent of homes sold in March, down from 17 percent in February but up from 14 percent a year ago. Sixty-three percent of investors paid in cash, and all-cash sales made up 23 percent of transactions, down from 27 percent in February and 25 percent a year ago.
Sales of foreclosed properties made up 5 percent of sales during the month and 1 percent were short sales. The two had a combined share of 7 percent of February sales and 8 percent a year earlier. Foreclosures sold for an average discount of 16 percent below market value in March (18 percent in February), while short sales were discounted 14 percent (17 percent in February).
Existing-home sales jumped by 10.1 percent in the Northeast, to an annual rate of 760,000, and are now 4.1 percent above a year ago. The median price in the Northeast was $260,800, a 2.8 percent annual increase.
In the Midwest sales rose 9.2 percent to an annual rate of 1.31 million, 3.1 percent above a year ago. The median price in the Midwest rose 6.2 percent to $183,000.
The South saw existing-home sales rise 3.4 percent to 2.42 million units, an 8.5 percent faster pace than in March 2016. The median price in the South was $210,600, up 8.6 percent year-over-year.
The West was the only region where sales lagged, down 1.6 percent from February to an annual rate of 1.22 million. Still they remained 5.2 percent higher than the previous March. The median price in the West was $347,500, an 8.0 percent increase.