Spring sales of existing-homes climbed to their highest pace in over 10 years for the month of March and a severe lack of housing inventory resulted in much less time on the market, according to the National Association of Realtors® (NAR). Only the West saw a decline in sales activity in March.
Total existing-home sales in March for single-family homes, townhomes, condominiums and co-ops, increased 4.4% to a seasonally adjusted annual rate of 5.71 million from a downwardly revised 5.47 million in February. March’s sales pace is 5.9% above a year ago and surpasses January as the strongest month of sales since February 2007 (5.79 million).
First-time buyers made up the bulk of the sales in March with 32% of home sales, which is the same as the previous month and a 30% increase from a year ago. All-cash sales represented 23% of transactions in March, down from 27% in February and 25% a year ago. Distressed sales (foreclosures and short sales) were 6% of sales, 7% lower than February and down 8% from the previous year.
The NAR said that home sales in most areas of the country saw improvement in March except in the West where sales were down by 1.6% to an annual rate of 1.22 million, but are still 5.2% for this same time last year. The median sales price was $347,500, an increase of 8.0% from March 2016.
The Northeast saw sales soar 10.1% to an annual rate of 760,000, and are now 4.1% above a year ago. The median price in the Northeast was $260,800, which is 2.8% above March 2016.
The Midwest also saw sales jump in March 9.2% to an annual rate of 1.31 million. A 3.1% increase from a year ago. The median price in the Midwest was $183,000, up 6.2% from a year ago.
Existing-home sales in the South in March rose 3.4 percent to an annual rate of 2.42 million, and are now 8.5 percent above March 2016. The median price in the South was $210,600, up 8.6 percent from a year ago.
The total number of existing homes for sale climbed 5.8% to 1.83 million existing homes available for sale, but is still 6.6%t lower than a year ago (1.96 million) and has fallen year-over-year for 22 straight months. Unsold inventory is at a 3.8-month supply at the current sales pace (unchanged from February).
Lawrence Yun, NAR chief economist, says existing sales roared back in March and were led by hefty gains in the Northeast and Midwest. “The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market and were successfully able to close on a home last month,” he said. “Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does.”
Added Yun, “Bolstered by strong consumer confidence and underlying demand, home sales are up convincingly from a year ago nationally and in all four major regions despite the fact that buying a home has gotten more expensive over the past year.”
Properties typically stayed on the market for 34 days in March, which is down significantly from 45 days in February and 47 days a year ago. Short sales were on the market the longest at a median of 90 days in March, while foreclosures sold in 52 days and non-distressed homes took 32 days (shortest since NAR began tracking in May 2011). Forty-eight percent of homes sold in March were on the market for less than a month.
“Last month’s swift price gains and the remarkably short time a home was on the market are directly the result of the homebuilding industry’s struggle to meet the dire need for more new homes,” said Yun. “A growing pool of all types of buyers is competing for the lackluster amount of existing homes on the market. Until we see significant and sustained multi-month increases in housing starts, prices will continue to far outpace incomes and put pressure on those trying to buy.”
NAR President William E. Brown, a Realtor® from Alamo, California, says patience is a virtue for prospective first-time buyers this spring. “Realtors® in most markets are saying interest from first-timers is up this year, but competition is stiff for listings in their price range,” he said. “The best advice is to lean on the guidance of a Realtor® throughout the home search and be careful about stretching the budget too far. Don’t get frustrated by losing out on a home and know the right one will eventually come along in due time.”