After reversing a 12-month slide last month, existing home sales retreated in March as mortgage rates began to increase again in February, according to the National Association of Realtors (NAR). With inflation continuing to ease and rent growth expected to slow, existing home sales will rebound, despite the slight drop in March.
Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, fell 2.4% to a seasonally adjusted annual rate of 4.44 million in March. On a year-over-year basis, sales were 22.0% lower than a year ago.
The first-time buyer share rose to 28% in March, up from 27% last month but down from 30% in March 2022. The weakening of the first-time buyer share is a reminder of the pricing out the market has experienced. The March inventory level measure increased slightly to 0.98 million units and was up 0.93 million from a year ago.
At the current sales rate, March unsold inventory sits at a 2.6-months’ supply, unchanged from last month but up from a 2.0-months reading a year ago. This inventory level remains very low, compared to balanced market conditions (4.5 to 6 months’ supply), and illustrates the long-run need for more home construction.
Homes stayed on the market for an average of 29 days in March, down from 34 days in February but up from 17 days in March 2022. In March, 65% of homes sold were on the market for less than a month.
The March all-cash sales share was 27% of transactions, down from 28% last month and a year ago. All-cash buyers are less affected by changes in interest rates.
The March median sales price of all existing homes was $375,700, down 0.9% from a year ago. The median existing condominium/co-op price of $337,300 in March was up 2.1% from a year ago.
Geographically, sales in three regions dropped in March, ranging from 1.0% in the South to 5.5% in the Midwest. Sales in the Northeast remained unchanged in March. On a year-over-year basis, all four regions continued to see a double-digit decline in sales, ranging from 17.6% in the Midwest to 30.5% in the West.
The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI rose 0.8% from 82.5 to 83.2 in February. However, on a year-over-year basis, pending sales were 21.1% lower than a year ago per the NAR data.