Existing-home sales fell to 4.48 million (seasonally adjusted annualized rate) in March from an upwardly revised February rate of 4.60 million, the National Association of Realtors (NAR) reported Thursday. Economists had forecast the March sales pace would be 4.62 million. At the same time, the median price of a new home rose to $163,800, its highest level since last November’s $164,000 and up 2.5 percent since March 2011, the first year-year increase in prices since December 2010.
The sales pace was the weakest since November 2011. Sales have slipped in three of the last four months.
The inventory of homes for sale dropped to 2.37 million, the first decline in three months, bringing the months’ supply of homes on the market to 6.3.
March sales – completed transactions – were down 2.6 percent from February but are up 5.2 percent from March 2011. February’s sales pace was originally reported as 4.59 million
As sales fell for two straight months, the median price of an existing-home rose for the second straight month to record the encouraging year-year price increases.
Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 29 percent of March sales —18 percent were foreclosures and 11 percent were short sales —compared with 34 percent in February and 40 percent in March 2011, the NAR said. Foreclosures typically sold for an average 19 percent below market price in March, while short sales were discounted 16 percent.
Total home sales inventory at the end of March fell 1.3 percent to 2.37 million existing homes available for sale, a 6.3-month supply at the current sales matching February. The dip in inventory was the first in three months. The months’ supply of existing homes for sale remains well below the July 2010 cyclical peak of 12.4 which had been the highest level since 1982. Inventories as tracked by the NAR are 21.5 percent below their year ago level however anecdotal evidence though suggests there is still a large “shadow” inventory of homes available for sale, especially bank-owned properties.
Regionally, existing-home sales fell in March in every region of the country except the Midwest where sales were flat. The steepest drop in sales was in in the West, down 110,000 to 1.13 million, below the 1.14 million sales pace in March 2011 Sales in the other regions were all above year-ago sales levels.
The median price of an existing home rose month-month in all four regions and was up year-year in three of the four regions, falling only in the Northeast.
Lawrence Yun, the NAR’s chief economist, characterized the report as signaling a recovery in housing.
“The recovery is happening though not at a breakout pace, but we have seen nine consecutive months of year-over-year sales increases,” he said. “Existing-home sales are moving up and down in a fairly narrow range that is well above the level of activity during the first half of last year. With job growth, low interest rates, bargain home prices and an improving economy, the pent-up demand is coming to market and we expect housing to be notably better this year.”
By: Mark Lieberman, Five Star Institute Economist
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