US existing home sales bounce back after unexpected decline

Image Sales of existing homes in the United States bounced back in March with big gains in the Northeast and Midwest, according to the latest index data to be published.

Total existing sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, increased by 5.1% to a seasonally adjusted annual rate of 5.33 million in March from a downwardly revised 5.07 million in February.

The data from the National Association of Realtors also shows that overall sales rose in all four major regions last month and were up 1.5% compared with March 2015. Lawrence Yun, NAR chief economist said the rebound was welcome after an uncharacteristically large decline in February.

‘Closings came back in force last month as a greater number of buyers, mostly in the Northeast and Midwest, overcame depressed inventory levels and steady price growth to close on a home,’ he explained.

‘Buyer demand remains sturdy in most areas this spring and the mid-priced market is doing quite well. However, sales are softer both at the very low and very high ends of the market because of supply limitations and affordability pressures,’ he added.

The index also shows that the median existing home price for all housing types in March was $222,700, up 5.7% from March 2015 when it was $210,700. March’s price increase marks the 49th consecutive month of year on year gains.

Total housing inventory at the end of March increased 5.9% to 1.98 million existing homes available for sale, but is still 1.5% lower than a year ago when it was 2.01 million. Unsold inventory is at a 4.5 month supply at the current sales pace, up from 4.4 months in February.

‘The choppiness in sales activity so far this year is directly related to the unevenness in the rate of new listings coming onto the market to replace what is, for the most part, being sold rather quickly,’ said Yun.

‘Additionally, a segment of would be buyers at the upper end of the market appear to have been spooked by January’s stock market correction,’ he explained.

Matching the lowest share since August 2015, properties typically stayed on the market for 47 days in March, a decrease from 59 days in February and below the 52 days in March 2015.

Short sales were on the market the longest at a median of 120 days in March, while foreclosures sold in 50 days and non-distressed homes took 46 days. Some 42% of homes sold in March were on the market for less than a month, the highest since July 2015 when it was 43%.

The data also shows that the share of first time buyers was 30% in March, unchanged both from February and a year ago. First time buyers in all of 2015 also represented an average of 30%.

‘With rents steadily rising and average fixed rates well below 4%, qualified first time buyers should be more active participants than what they are right now. Unfortunately, the same underlying deterrents impacting their ability to buy haven’t subsided so far in 2016. Affordability and the low availability of starter homes is still a major barrier for them in most markets,’ Yun pointed out.

All-cash sales were 25% of transactions in March, unchanged from February, and are up from 24 percent a year ago. Individual investors, who account for many cash sales, purchased 14% of homes in March, down from 18% in February and unchanged from a year ago while 66% of investors paid cash in March.

Distressed sales, that is foreclosures and short sales, fell to 8% in March, down from 10% both last month and a year ago. Some 7% of March sales were foreclosures and 1% were short sales. Foreclosures sold for an average discount of 16% below market value in March compared with 17% in February, while short sales were discounted 10% compared to 16% in February.

Single family home sales increased 5.5% to a seasonally adjusted annual rate of 4.76 million in March from 4.51 million in February and are now 2.6% higher than the 4.64 million pace a year ago. The median existing single family home price was $224,300 in March, up 5.8% from March 2015.

Existing condominium and co-op sales rose 1.8% to a seasonally adjusted annual rate of 570,000 units in March from 560,000 in February but are still 6.6% below March 2015. The median existing condo price was $209,600 in March, 4.6% above a year ago.

A regional breakdown of the figures shows that March existing home sales in the Northeast increased 11.1% and are now 7.7% above a year ago. The median price in the Northeast was $254,100, which is 5.8% above March 2015.

In the Midwest, existing home sales were up 9.8% and are now 0.8% above March 2015. The median price in the Midwest was $174,800, up 7% from a year ago.

Existing home sales in the South rose 2.7% to an annual rate of 2.25 million in March and are 2.3% above March 2015. The median price in the South was $194,400, up 4.6% from a year ago.

Existing home sales in the West rose by 1.8% but are 2.5% lower than a year ago. The median price in the West was $320,800, which is 5.9% above March 2015.


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