According to the National Association of RealtorsThe March existing-home sales dropped for the second consecutive month to 5.77 million. This is a decrease of 2.7% month over month from February and a decline of 4.5% year over year. NAR defines total existing home sales as all transactions, which include single-family homes and townhomes, condominiums and co-ops.
According to NAR Chief Economist, “The impact of sharply rising interest rates and higher inflation on the housing market is beginning to show in the market for housing,” Lawrence Yun. “Homes are selling quickly and home prices have risen in the double digits,” he said.
NAR reported that the U.S. housing stock at March’s end was 950,000 units. This was an 11.8% increase from February’s totals, but 9.5% less than one year ago, when the nation had a housing supply of 1.05 million. At the current sales pace, unsold inventory is at a two month supply, up from 1.7months in February and down from March 2021’s 2.1months.
According to Danielle Hale (Realtors.com Chief Economist), the number of home-sellers continues to be lower than what the market has seen in previous years. This creates a problem for buyers as there are still very few homes available for purchase.
March’s median price of an existing home for all types of housing increased to $375,000. This is a 15% increase over March 2021, when it was $326,300. Prices rose in each region. This is the 121st consecutive month of year-overyear increases.
Against this backdrop, the average home sales price has risen 15% in March. This is more than the 8.5% consumer price inflation rate, which was at its highest point for 40 years. The average home selling price in March was $395, which is roughly 32% more than it was last year. This is in addition to the increase in mortgage rates in the last year. This is almost four times the recent overall inflation. The rising home price and rising cost of financing a home purchase are making some homebuyers reconsider whether a home is within their budget. This is especially true when inflation is already putting pressure on budgets with rising prices for everything, from groceries to gas.
As mortgage rates rise, it is important to have a plan. Recently, 5% was the highest level in 11 years.More are being excluded from the market, particularly first-time buyers, who are also feeling the pinch from inflationary pressure. NAR reported March sales of 30% to first-time buyers. This is an increase from 29% in February and 32% in March 2021.
Yun stated that “it appears first-time homebuyers still want to lock in current mortgage rates before they inevitably rise.”
Existing-home sales in the Northeast fell 2.9% in March. This was an 11.8% decrease from March 2021. The Northeast saw a median price of $390,200, an increase of 6.8% over one year ago. The Midwest saw a decrease of 4.5% in existing-home sales, falling to an annual rate 1,270,000 in March. This is a 3.1% drop over March 2021. The median price for the Midwest was $271,000. This is 10.4% higher than March 2021. The South saw existing-home sales drop 3% in March compared to the previous month. This resulted in an annual rate of 2,620,000 for the South, which is a decrease by 3% over one year ago. The median South price was $339,000, an increase of 21.2% over the previous year. The South saw the fastest price appreciation compared to the other three regions for the seventh consecutive month. The West saw existing-home sales remain steady in March, with a rate of 1,210,000 per year in March, which was 4.7% less than the previous month. The median West price was $519,900. This is 5.4% higher than March 2021.