Existing home sales bounced back nicely in March to kick off the spring home buying season as inventories remained constrained but expanded modestly.
Home sales increased 5.1% to a seasonally adjusted annual rate of 5.33 million, the National Association of Realtors said Wednesday. Economists had predicted that sales rose 4% to a 5.28 million annual rate, according to the median estimate of those surveyed by Bloomberg. February sales tumbled more than 7% and were revised down slightly Wednesday to annual pace of 5.07 million.
In March, single-family home sales increased 5.5%, while condominium and co-op sales edged up 1.8%. The median sales price was $222,700, up 5.7% from a year ago.
“Closings came back in full 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,” says Lawrence Yun, chief economist of the realtors group. He added that demand is solid and mid-priced homes are moving briskly but sales are lackluster at the low and high ends of the market because of a supply crunch and restraints on affordability.
Tight inventories have limited sales and pushed up prices, further crimping purchases. In March, housing supplies increased 5.9% and there was a 4.5 month supply of unsold inventory, up from 4.4 months in February. A six-month supply is considered balanced.
Homes turned over rapidly. They were on the market an average 47 days in March, down from 59 days in February and matching the briskest pace since last August.
Yun says sales have been choppy this year largely because the supply of new listings has been volatile. Also, some prospective buyers at the upper end of the market “appeared to have been spooked by January stock market correction,” he says.
One of the biggest obstacles to a more vibrant housing market continues to be meager participation by first-time homebuyers, who Yun said should be more active amid steadily rising rents and below-4% mortgage rates. Thirty percent of all sales were by first-time buyers, unchanged from February and in line with the share in 2015. That’s below the normal prerecession portion of about 40%
“Affordability and the low availability of starter homes is still a major barrier for them in most markets,” Yun says.
Sales climbed 11.1% of the Northeast and 9.8% in the Midwest, driving March's rebound. Sales rose 2.7% the South and 1.8% in the West.
