Existing-home sales fall 4.9 percent in March
After positive movement in February, existing-home sales fell 4.9 percent in March. Though sales dropped in all four major U.S. regions, the Midwest bore the brunt of the fall. This decrease leaves the seasonally adjusted rate for March at 5.21 million—down 5.4 percent from a year ago (5.51 million in March 2018).
Lawrence Yun, NAR’s chief economist, explains that these results were to be expected. “It is not surprising to see a retreat after a powerful surge in sales in the prior month. Still, current sales activity is underperforming in relation to the strength in the job markets. The impact of lower mortgage rates has not yet been fully realized.”
Despite decreases in sales, the median existing-home price for all housing types was up 3.8 percent from March 2018, marking the 85th straight month of year-over-year gains. Also on the rise, total housing inventory increased from 1.63 million in February to 1.68 million in March—up 2.4 percent overall from 1.64 million a year ago.
“Further increases in inventory are highly desirable to keep home prices in check,” says Yun. “The sustained steady gains in home sales can occur when home price appreciation grows at roughly the same pace as wage growth.”
Regarding the increase in inventory, NAR President John Smaby comments that “We had been calling for additional inventory, so I am pleased to see that there has been a modest increase on that front. We’re also seeing very favorable mortgage rates, so now would be a great time for those buyers who may have been waiting to make a purchase.”
As far as the time spent on the market, 47 percent of homes sold in March were on the market for less than a month, while on average properties remained on the market for 36 days—up from 30 days a year ago, but down from 44 days in February.
Yun explains, “The lower-end market is hot, while the upper-end market is not. The expensive home market will experience challenges due to the curtailment of tax deductions of mortgage interest payments and property taxes.”
First-time homebuyers comprised 33 percent of sales in March, up from 30 percent a year ago, while all-cash sales accounted for 21 percent of transactions in March, up from 20 percent a year ago, but down from 23 percent in February. Distressed sales, including foreclosures and short sales, accounted for 3 percent of sales, down from 4 percent both last month and last year.
From a regional standpoint, March existing-home sales decreased across the board. The Northeast saw a 2.9 percent decline to an annual rate of 670,000, down 1.5 percent from a year ago; the Midwest declined 7.9 percent from last month to an annual rate of 1.17 million, 8.6 percent below March 2018; the South declined 3.4 percent to an annual rate of 2.28 million, down 2.1 percent from last year; and the West fell 6 percent to an annual rate of 1.09 million, 10.7 percent below last year.