Sales of previously owned homes decline in March.
Existing-home sales posted a 2.4% month-over-month decline in March as buyers remain sensitive to shifts in mortgage rates.
Total existing-home sales waned 2.4% from February to a seasonally adjusted annual rate of 4.44 million in March, the National Association of Realtors reported Thursday. Sales were 22% below last year’s level, down from 5.69 million in March 2022.
NAR chief economist Lawrence Yun noted that home prices continued to rise in regions where jobs are being added, and housing is relatively affordable. “However, the more expensive areas of the country are adjusting to lower prices.”
The median price of previously owned homes slid 0.9% from $379,300 a year ago to $375,700 in March. Meanwhile, housing inventory increased 1% month over month and 5.4% year over year to 980,000 units in March. Unsold inventory remained flat at a 2.6-month supply.
“Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” said Yun. “Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand. It’s a unique housing market.”
After consecutive weeks of decline, the 30-year fixed mortgage rate averaged 6.27% as of April 13. That’s down from 6.28% from the previous week, according to data from Freddie Mac.
Holden Lewis, home and mortgage expert at NerdWallet, believes homebuyers are growing accustomed to higher mortgage rates.
“Most analysts compare the year-over-year numbers when looking at home sales and prices. But it’s also informative to compare the month-over-month numbers. From February to March, the typical home price went up $12,100. This illustrates that home buyers are satisfying their pent-up demand for homeownership despite a limited number of homes for sale. Furthermore, home buyers are growing accustomed to higher mortgage rates: The average rate on a 30-year mortgage was about one-quarter of a percentage point higher in March than in February, yet home sales rose by 91,000.”
“With overall consumer price inflation calming and rents expected to decelerate from robust apartment construction, the Federal Reserve’s monetary policy will surely shift from tightening to neutral to possibly loosening over the next 12 months,” Yun added. “Therefore, home sales will steadily rebound despite several months of fluctuations.”