After reaching a record high in October, existing home sales, as reported by the National Association of Realtors (NAR), dropped to a seven-month low in March, as tight inventory continues to limit sales and fuel home price growth. The median existing home price in March surged to an all-time high and was the fastest pace on record.
Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, fell 3.7% to a seasonally adjusted annual rate of 6.01 million in March, the lowest level since September 2020. However, on a year-over-year basis, sales were still 12.3% higher than a year ago.
The first-time buyer share rose to 32% in March, up from 31% in February but down from 34% a year ago. However, price gains threaten this submarket in the future. The March inventory level increased slightly from a record-low of 1.03 to 1.07 million units but is still down from 1.49 million units a year ago.
At the current sales rate, the March unsold inventory sit at a 2.1-month supply, marginally up from February’s 2.0-month but still down from 3.3-month a year ago. This low level supply of resale homes is good news for home construction.
Homes stayed on the market for an average of just 18 days in March, an all-time low, down from 20 days in February and 29 days a year ago. In March, 83% of homes sold were on the market for less than a month.
The March all-cash sales share was 23% of transactions, up from 22% last month and 19% a year ago.
Tight supply continues to push up home prices. The March median sales price of all existing homes was $329,100, up 17.2% from a year ago, representing the 109th consecutive month of year-over-year increases. The median existing condominium/co-op price of $289,000 in March was up 9.6% from a year ago.
Geographically, all four regions saw a decline in existing home sales in March, ranging from 1.3% in the Northeast to 8.0% in the West. On a year-over-year basis, however, sales still grew in all four regions, ranging from 0.8% in the Midwest to 16.9% in the Northeast.
Meanwhile, the Pending Home Sales Index (PHSI), also reported by the NAR, is a forward-looking indicator based on signed contracts. The PHSI fell 10.6% from 123.4 in January to 110.3 in February. On a year-over-year basis, sales were 0.5% lower than a year ago, the first annual decline in eight months.
Though consumers are facing higher home prices and declining housing affordability, housing demand is expected to remain solid due to historically favorable mortgage rates and a promising economic outlook. Meanwhile, rising lumber prices and supply chain issues are limiting builders’ abilities to meet the increased level of demand. The imbalance between housing supply and demand could hamper future sales by driving up house prices and eroding affordability.
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