Mixed housing signals or a by product of incredibly low inventory? I expect to see prices continue to increase and sales slow until we can find an equilibrium balance between adequate supply and buyer demand in our market!
With a sharp jump in prices, existing-home sales fell 0.6 percent in March—the steepest drop since December—to 4.92 million units, the National Association of Realtors(NAR) reported Monday. Economists had expected a 1.0 percent increase to 5.03 million from February’s original report of 4.98 million sales.
February sales were revised downward to 4.95 million.
The median price of an existing single-family home jumped $11,100—the strongest monthly gain in almost eight years—to $184,300, the highest level in seven months.
The inventory of homes for sale edged up to 1.93 million units—a 4.7 month supply, both the highest level since November.
The drop off in sales came despite a sharp increase two months ago in the NAR’s pending home sales index, which tracks contracts for sale, but is consistent with other hints of a weakening housing market, principally the drop in builder confidence reported by the National Association of Home Builders last week. Homebuilders reported a fall-off in buyer traffic, meaning fewer people were shopping for homes.
The sales dip was also consistent with recent reports from the Bureau of Labor Statistics, which showed a decline in the number of mortgage loan underwriters and mortgage brokers, as well as appraisers.
Despite the disappointing month-over-month sales numbers, the NAR found encouragement in the year-over-year comparisons for both sales and prices.
March sales were 10.3 percent higher than sales one year ago and the median price was up 11.8 percent from March 2012, the strongest year-over-year price gain since November 2005.
While the inventory of homes for sale increased for the second straight month, it remained down from a year ago, off 1.6 percent. The inventory of homes for sale averaged 1.87 million in the first quarter—typically a slow sales period—but nonetheless down 20.6 percent from the 2.35 million average in the first quarter of 2012. The months’ supply of homes for sale—a function of inventory and the sales pace—was 6.2 months a year ago. The current months’ supply is off 24.2 percent.
Closings averaged 4.937 million in the first quarter, up 9.8 percent from 4.497 in the first quarter a year ago.
The month-over-month drop in sales was the first in three months and gave back 60 percent of the gain recorded in January and February combined.
Sales have fallen four times in the last 12 months; in three of those months, prices rose. In the eight months in which sales increased, prices fell four times.
Weak prices continue to keep inventories low. The median price of an existing single-family home has increased in four of the last five months, averaging $177,540, down from $183,340 in the previous five months.
Distressed homes—foreclosures and short sales—accounted for 21 percent of March sales, down from 25 percent in February and 29 percent in March 2012, the NAR said. Thirteen percent of March sales were foreclosures, and 8 percent were short sales. Foreclosures sold for an average discount of 15 percent below market value in March, while short sales were discounted 13 percent compared with February when foreclosures sold for an average discount of 18 percent, while short sales were discounted 15 percent.
The smaller discounts for foreclosures and short sales in the last month suggests some market firming.
Unlike the government report on new home sales, which tracks contracts, the NAR report is based on closings, which means this report, though labeled March, actually reflects economic conditions in January when contracts were signed. Those January contracts followed the uncertainty of “fiscal cliff” negotiations, which threatened the mortgage interest tax deductions and other homeownership incentives.
The median time on market for all homes was 62 days in March, down from 74 days in February and is 32 percent below 91 days in March 2012. Short sales were on the market for a median of 81 days, while foreclosures typically sold in 46 days and non-distressed homes took 66 days. Thirty-seven percent of all homes sold in March were on the market for less than a month.
First-time buyers accounted for 30 percent of purchases in March, unchanged from February; they were 33 percent in March 2012, the NAR reported.
All-cash sales were at 30 percent of transactions in March, down from 32 percent in February, hinting at some easing among mortgage lenders; they were 32 percent in March 2012. Individual investors, who account for most cash sales, purchased 19 percent of homes in March, down from 22 percent in February; they were 21 percent in March 2012.
Regionally, existing-home sales in the Northeast were unchanged at an annual rate of 630,000 in March and are 6.8 percent above March 2012. The median price in the Northeast was $237,000, up $2,800 or 1.2 percent from February and up 3.0 percent from a year ago.
Existing-home sales in the Midwest rose 1.8 percent in March to a pace of 1.16 million and are 14.9 percent above a year ago. The median price in the Midwest was $141,800, $12,100 or 9.3 percent above February and up 7.8 percent from March 2012.
In the South, existing-home sales slipped 1.5 percent to an annual level of 1.95 million in March but are 12.7 percent above March 2012. The median price in the South was $161,700, which was $10,900 or 7.2 percent higher than in February and 10.4 percent above a year ago.
Existing-home sales in the West declined 1.7 percent to a pace of 1.18 million in March but are 4.4 percent above a year ago. The median price in the West rose $21,300 or 9.0 percent in March to $258,100, up 26.1 percent from March 2012.
Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am EST.