New figures show existing-home sales fell to their lowest level in more than 18 months during March, according to the National Association of Realtors, but the trend may be staring to ease.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 0.2% to a seasonally adjusted annual rate of 4.59 million in March from 4.60 million in February. This is 7.5% below the 4.96 million-unit pace in March 2013.
Last month’s sales volume remained the slowest since July 2012, when it was 4.59 million. The drop was less than consensus forecast from economists and there is increasing optimism now that the harsh winter has passed
Lawrence Yun, NAR chief economist, said that current sales activity is underperforming by historical standards. “There really should be stronger levels of home sales given our population growth,” he said. “In contrast, price growth is rising faster than historical norms because of inventory shortages.”
Yun expects some improvement in the months ahead. “With ongoing job creation and some weather delayed shopping activity, home sales should pick up, especially if inventory continues to improve and mortgage interest rates rise only modestly.”
The median existing-home price for all housing types in March was $198,500, up 7.9% from March 2013.
NAR President Steve Brown said first-time buyers have been stuck in a rut. “There are indications that the stringent mortgage underwriting standards are beginning to ease a bit, particularly regarding credit score requirements, but they remain a headwind for entry-level and single-income home buyers,” he said.
“We also have tight inventory in the lower price ranges where many starter homes are found, but rising new-home construction means some owners will be trading up and more existing homes will be added to the inventory. Hopefully, this will create more opportunities for first-time buyers,” Brown said.
Single-family home sales were unchanged at a seasonally adjusted annual rate of 4.04 million in March, the same as February, but are 7.3% below the 4.36 million pace a year ago.
Sales gains in the Northeast and Midwest were offset by declines in the West and South.
Existing-home sales in the Northeast rose 9.1% but are 4.8% below March 2013. Existing-home sales in the Midwest rose 4% in March, but are 10.3% below a year ago, while existing-home sales in the South declined 3% percent and also are 3% percent below March 2013. Existing-home sales in the West fell 3.7% and are 13.4% below a year ago.