Existing-home sales seemed to have reclaimed their footing, posting their second consecutive gain after two straight months of declines. The National Association of Realtors® (NAR) said March sales of single-family homes, townhomes, condos, and coops rose 1.1 percent compared to February, putting sales at a seasonally adjusted annual rate of 5.60 million units.
The March pace built on a 3.0 percent increase in February, but sales are still down 1.2 percent compared to March 2017. Sales in February were at a rate of 5.54 million.
Analysts polled by Econoday had expected existing home sales in the 5.39 to 5.80 range. The consensus was 5.51 million units.
Single-family homes sales were up 0.6 percent to an annual rate of 4.99 million units from 4,96 million in February, putting those sales 1.0 percent behind the pace a year earlier. Existing condo and co-op sales were the star performers, jumping 5.2 percent to a 610,000 pace. Shortages has especially plagued condo sales in recent months, and they remain 3.2 percent below the 504 million sales posted a year ago.
Lawrence Yun, NAR chief economist, says closings in March eked forward despite challenging market conditions in most of the country. "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 Yun. "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."
The median existing-home price for all housing types in March was $250,400 compared to $236,600 a year earlier, a 5.8 percent increase. March's price increase marks the 73rd straight month of year-over-year gains. The median existing single-family home price rose 5.9 percent to $252,100, and the median existing condo price was $236,100 a 4.8 percent gain.
"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.
The total housing inventory did improve in March, climbing 5.7 percent to 1.67 million existing homes available for sale. March marked the 34th consecutive month that the inventory shrunk on an annual basis, falling 7.2 percent behind the 1.80 million homes for sale in March 2017. Unsold inventory is estimated at a 3.6-month supply at the current sales pace compared to 3.8 months a year ago.
Properties typically stayed on the market for 30 days in March, which is down from 37 days in February and 34 days a year ago. Fifty percent of homes sold in March were on the market for less than a month.
"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."
First-time buyers accounted for 30 percent of sales in March, a slight improvement from February's 29 percent. Last year their share was 32 percent. Individual investors purchased 15 percent of homes sold during the month. Twenty percent of transactions were all-cash, down 4 points from February and 3 points from the previous March
NAR President Elizabeth Mendenhall says the extremely tight inventory in the entry-level segment of the market should greatly benefit homeowners looking to trade up this spring. "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," she said. "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."
Two regions were responsible for the positive number in March. Sales in the Northeast jumped 6.3 percent to an annual rate of 680,000, remaining 9.3 percent short of sales the previous March. The median price in the Northeast was $270,600, which is 3.3 percent annual increase.
The Midwest posted a 5.7 percent gain in sales to 1.29 million units annualized. That region is also running behind last year, with sales down 1.5 percent. The median price in the Midwest was $192,200, up 5.1 percent.
The Northeast and Midwest gains were offset by a slight decline in the South and a much larger one in the West. Sales in the South ticked down 0.4 percent to 2.40 million but are 0.4 percent higher than a year ago. Sales in the West were at an annual rate of 1.23 million, a 3.1 percent loss but they also managed to stay ahead of the March 2017 pace, rising 0.8 percent. Median home prices were up 5.7 percent to $222,400 in the South and in the West 7.9 percent appreciation brought the median price to $377,100.