Homebuying season starts slowly
Shoppers contend with still-raised rates
LOS ANGELES — The spring homebuying season is off to a sluggish start as home shoppers contend with elevated mortgage rates and rising prices.
Sales of previously occupied U.S. homes fell 4.3 percent in March from the previous month to a seasonally adjusted annual rate of 4.19 million, the National Association of Realtors said Thursday. That’s the first monthly decline in sales since December and follows a nearly 10 percent monthly sales jump in February.
Existing home sales also fell
3.7 percent compared with March last year. The latest sales still came in slightly higher than the 4.16 million pace economists were expecting, according to Factset.
A modest pullback in mortgage rates early this year helped lift home sales in January and February, but rates mostly ticked up in February and March, when many of the home sales that were finalized last month would have taken place.
Mortgage rates have risen the past three weeks, with the average rate on a 30-year mortgage moving this week above 7 percent to its highest level since late November, mortgage buyer Freddie Mac said Thursday.
The trend is a setback for home shoppers this spring homebuying season, traditionally the housing market’s busiest time of the year.
“Home sales essentially remain stuck because (the) mortgage rate has been stable and inventory is not really rising,” said Lawrence Yun, the NAR’S chief economist.
Despite the pullback in sales, the national median home sales price climbed 4.8 percent from a year earlier to $393,500. That’s the highest median sales price for any March on records going back to 1999 and marks the ninth month in a row that prices have risen compared to a year earlier.
The latest surge in prices reflects the heightened competition many home shoppers are facing. Consider, 60 percent of homes purchased in March sold within less than a month of hitting the market. And 29 percent of homes sold above their initial list price, up from 28 percent in March last year, Yun said.
“Inventory is simply not there,” he said.
While the supply of homes on the market remains below the historical average, the typical increase in homes for sale that happens ahead of the spring homebuying season gave home shoppers a wider selection of properties to choose from.
At the end of last month, there were 1.11 million unsold homes on the market, a 4.7 percent increase from February and up 14.4 percent from a year earlier, the NAR said. That’s still well short of the 1.7 million homes on the market in March 2019, before the pandemic.
The available inventory at the end of last month amounted to a 3.2-month supply, going by the current sales pace.
That’s up from a 2.9-month supply in February and a 2.7-month supply in March last year. In a more balanced market between buyers and sellers, there is a 4- to 5-month supply.
That shortage of homes on the market means home sellers generally having an edge on buyers, especially those vying for the most affordable homes, which often fetch multiple offers.
The U.S. housing market is coming off a deep, 2-year sales slump triggered by a sharp rise in mortgage rates and a dearth of homes on the market.