Low inventory leads to record-high price gains and a slight dip in existing-home sales
Marking the second consecutive month of declines, existing-home sales dipped 3.7% in March to a seasonally adjusted annual rate of 6.01 million, though sales still came in 12.3% higher than last year.
“Consumers are facing much higher home prices, rising mortgage rates and falling affordability, however, buyers are still actively in the market,” says the National Association of Realtors® (NAR’s) chief economist, Lawrence Yun.
Yun attributes the dip in sales to the lack of inventory currently on the market. “The sales for March would have been measurably higher, had there been more inventory,” he says. “Days-on-market are swift, multiple offers are prevalent and buyer confidence is rising.”
Positive predictions for increased supply and continued demand
And though mortgage rates have inched up a notch, Yun explains they still remain favorable for buyers, while he also expects the positive economic outlook to help increase supply in the months ahead.
“At least half of the adult population has received a COVID-19 vaccination, according to reports, and recent housing starts and job creation data show encouraging dynamics of more supply and strong demand in the housing sector,” says Yun.
Low inventory driving home prices up
The median existing-home price in March was $329,100—a record-breaking 17.2% increase from last year that marks the 109th straight month of year-over year gains.
All four major regions saw double-digit price gains:
- Northeast: $364,800—up 21.4% from last year
- Midwest: $248,200—up 13.5% from last year
- South: $283,900—up 15.6% from last year
- West: $493,300—up 16.8% from last year
Meanwhile, total housing inventory was at 1.07 million units at the end of March, which is 3.9% higher than February’s inventory, but 28.2% lower than March of 2020. Properties typically remained on the market for 18 days, with 83% of homes sold on the market for less than a month.
Aware of the implications of ongoing inventory issues, experts continue to call for construction—noting the potential hurdle first-time homebuyers could face if inventory continues to dwindle and prices continue to rise.
“Without an increase in supply, the society wealth division will widen with homeowners enjoying sizable equity gains while renters will struggle to become homeowners,” says Yun.
NAR’s President, Charlie Oppler, is hopeful that with a push to increase supply, first-time buyers will continue to enter the market. “NAR has made it a priority to be at the forefront of the anticipated economic revival,” says Oppler. “We will continue pushing for an increase in housing construction and inventory, with the goal of helping qualified buyers and countless families achieve the American Dream of homeownership.”
Existing-home sales across the regions
Though all four major regions saw a dip in month-to-month sales, year-over-year sales were up across the board.
March existing-home sales:
- Northeast: down 1.3% to an annual rate of 760,000—16.9% higher than last year
- Midwest: down 2.3% to an annual rate of 1,280,000—0.8% higher than last year
- South: down 2.9% to an annual rate of 2,700,000—15.9% higher than last year
- West: down 8.0% to an annual rate of 1,270,000—15.5% higher than last year