March Existing-Home Sales Hit Highest Level In 18 Months As Inventory Eases

Sales of previously-owned homes rose 6.1% in March as the tight supply of for-sale homes eased, greasing the tracks of the housing market.

Completed transactions of existing-homes (single-family homes, townhomes, condominiums and co-ops) increased to an annual, seasonally adjusted rate of 5.19 million in March over February’s 4.89 million pace, the National Association of Realtors said Wednesday. Compared to one year earlier, March’s sales pace is up 10.4%.

March also marked the highest annual sales rate since September 2013, when the pace was also 5.19 million. Sales have now increased on a year-over-year basis for six straight months.

“After a quiet start to the year, sales activity picked up greatly throughout the country in March,” said Lawrence Yun, NAR’s chief economist. “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.”

As of the end of March, the supply of available housing for sale stood at 2 million existing-homes, 5.3% higher than the prior month and 2% above one year earlier. The current number of homes available for sale represents a 4.6-month supply at the current sales pace, down from a 4.7-month supply in February. Economists generally consider a 6-month supply a healthy market.

“The modest rise in housing supply at the end of the month despite the strong growth in sales is a welcoming sign,” Yun said. “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.”

Despite slowing job growth after months of acceleration, easing inventory levels may be helping more new buyers get into their initial homes. First-time homebuyers made up 30% of the buyer pool in March, marking the third time since last March that this group’s share was at 30% or above. Last month they represented 29% of the buyer pool. In March NAR released a study showing that the gap between rent and income growth is broadening across the nation, making it more difficult for renters to become homeowners.

Also helping: though mortgage rates are ticking up, they remain at historic lows. The average rate for a 30-year, conventional, fixed-rate mortgage in March rose to 3.77% in March from February’s 3.71%, according to Freddie Mac, marking two straight months of increases.

The median existing-home price in March was $212,100, 7.8% higher than the median sales price for an existing-home one year earlier. March also marked the 37th straight month of year-over-year home price gains, and was the largest annual increase since year-over-year prices jumped 8.8% in February 2014.

After the housing market crashed in 2008, NAR began tracking the share of home sales that were distressed (foreclosures and short sales)–and that total continues to be on the decline. Distressed sales in March were 10% of the total, down from 11% in February and 14% one year earlier. In March, 7% of existing-home sales were foreclosures, 3% short sales. Foreclosures sold for an average discount of 16% below market value in March (17% in February); short sales were discounted an average 16% (15% in February).

The share of homes purchased for all-cash was 24% in March, down from 26% in February and from 33% one year ago. Individual investors, who account for many cash sales, purchased 14% of homes in March, flat compared to February and down from 17% in March 2014. Of these individual investors, 70% paid cash in March.

In March properties stayed on the market an average of 52 days, down from February (62 days), and a bit faster than one year earlier (55 days). Forty percent of homes sold in March were on the market less than a month.

Single-family home sales increased 5.5% to a (seasonally adjusted, annual) rate of 4.59 million in March, up from 4.35 million in February and 10.9% above the 4.14 million pace one year before. The median sales price for an existing-home was $213,500 in March, up 8.7% from a year earlier.

Condo and co-op sales stood at a (seasonally adjusted, annual) pace of 600,000 units in March, up from 540,000 in February and 7.1% higher than one year before. The median sales price for a previously owned condo was $201,400 in March, 1.6% higher than a year earlier.

While the sales pace varied by region, prices were up everywhere but the Northeast. In March the existing-home sales pace in the Northeast rose 6.9% to an annual rate of 620,000, 1.6% above a year ago. The median price in the Northeast was $240,500, 1.6% below a year earlier.

The Midwest led the regions in terms of sales pace, jumping 10.1% from February to an annual rate of 1.2 million in March, 12.1% above the level a year before. The median Midwest price was $163,600, up 9.7% from a year earlier.

Sales also climbed in both the South and the West in March, rising 3.8% to 2.19 million and 6.3% to 1.18 million, respectively. That’s a Southern increase of 11.7% from one year earlier, a Western jump of 11.3%. The median Southern sales price was $187,900 in March, up 9.3% from a year before; the median Western price was $305,000, an 8.3% increase year-over-year.

By Erin Carlyle