Existing-Home Sales Sprung Up In March
Existing-home sales in March – the most recent month for which data was available at press time – reached an annual pace of 5.71 million, up 4.4% from a downwardly revised 5.47 million in February and up 5.9% compared with March 2016, according to the National Association of Realtors (NAR).
It was the strongest pace for existing-home sales in 11 years.
Only the West saw a decrease in existing-home sales in March. Existing-home sales there were down 1.6%, month over month. The Northeast surged 10.1%, while the Midwest jumped 9.2% and the South increased 3.4%.
The report includes sales of townhouses, condominiums and co-ops.
Lawrence Yun, chief economist for NAR, says the increase in March means things look more “promising” for the spring home buying season.
“A rising number of households dipped their toes into the market and were successfully able to close on a home [in March],” Yun says in a statement. “Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does.”
The median existing-home price for all housing types in March was $236,400, up 6.8% from $221,400 in March 2016.
As of the end of March, there were about 1.83 million existing homes available for sale, which is up 5.8% compared with February but down 6.6% compared with March 2016.
That’s about a 3.8-month supply at the current sales pace.
Properties typically stayed on the market for 34 days in March – down from 45 days in February and 47 days a year ago.
Short sales were on the market the longest, at a median of 90 days in March, while foreclosures sold in 52 days and non-distressed homes took 32 days (which is the shortest since NAR began tracking in May 2011). About 48% of homes sold in March were on the market for less than a month.
The fact that mortgage rates have decreased for the past several weeks certainly helps.
Roughly 32% of existing-home sales in March went to first-time home buyers – unchanged from February and up from 30% compared with a year ago.
About 23% of transactions were all cash – down from 27% in February and down from 25% a year ago.
Individual investors, who account for many cash sales, purchased 15% of homes in March – down from 17% in February but up from 14% a year ago. About 63% of investors paid in cash in March.
Distressed sales, including foreclosures and short sales, represented about 6% of sales in March – down from 7% in February and down from 8% a year earlier.
Pending Home Sales Dipped 0.8% In March
After jumping 5.5% in February, pending home sales dipped 0.8% in March, according to the National Association of Realtors (NAR).
Still, pending home sales were up 0.8% compared with March 2016.
The month-over-month dip in March was not due to a lack of buyer demand but, rather, low inventory, which resulted in many would-be buyers not being able to sign contracts.
“Home shoppers are coming out in droves this spring and competing with each other for the meager amount of listings in the affordable price range,” says Lawrence Yun, chief economist for NAR, in a statement. “In most areas, the lower the price of a home for sale, the more competition there is for it.”
Yun says low inventory is part of the reason why first-time buyers have yet to make up a larger share of the market this year. He worries that the painfully low supply levels this spring could push home prices up higher, which, in turn, will create more affordability problems.
About 42% of homes in March sold at or above list price, which is the second-highest percentage since NAR began tracking pending home sales in December 2012.
“Sellers are in the driver’s seat this spring, as the intense competition for the few homes for sale is forcing many buyers to be aggressive in their offers,” Yun says. “Buyers are showing resiliency, given the challenging conditions. However, at some point – and the sooner the better – price growth must ease to a healthier rate. Otherwise, sales could slow if affordability conditions worsen.”
Existing-home sales are forecast to reach about 5.64 million this year – an increase of 3.5% from about 5.45 million in 2016, Yun says.
The national median existing-home price this year is expected to increase around 5%.
In 2016, existing sales increased 3.8%, and prices rose 5.1%.
Housing Starts Fell 6.8% In March
Housing starts in March were at a seasonally adjusted annual rate of 1.215 million, a decrease of 6.8% compared with a revised 1.303 million in February but an increase of 9.2% compared with 1.113 million in March 2016, according to estimates recently released by the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Starts of single-family homes were at a rate of about 821,000, a decrease of 6.2% compared with about 875,000 in February. Starts of multifamily dwellings (five units or more per building) were at a rate of about 385,000, a decrease of 6.1% compared with 410,000 in February.
The estimates for building permits, however, indicate that housing starts should start to increase in the months to come. Building permits in March were at a rate of about 1.260 million, an increase of 3.6% compared with 1.216 million in February and an increase of 17.0% compared with 1.077 million in March 2016.
Permits for single-family homes were at a rate of about 823,000, a decrease of 1.1% compared with about 832,000 in February. Permits for multifamily homes were at a rate of about 401,000, an increase of 18.3% compared with about 339,000 in February.
New Home Sales Took Nice Jump In March
New home sales in March were at a seasonally adjusted annual rate of about 621,000, an increase of 5.8% compared with a revised rate of about 587,000 in February and an increase of 15.6% compared with about 537,000 in March 2016, according to figures recently released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
It was the third straight month that new home sales increased on a month-over-month basis.
The median sales price of new homes sold in March was $315,100. The average sales price was $388,200.
As of the end of March, there were about 268,000 new homes available for sale in the U.S. – about a 5.2-month supply at the current sales rate.
[The March] increase in new home sales is aligned with solid builder confidence and shows that the spring home buying season is off to a strong start,” says Granger MacDonald, chairman of the National Association of Home Builders (NAHB), in a statement. “However, builders are concerned that ongoing increases in building material costs will hurt housing affordability, especially given [the recent] proposal by the Department of Commerce to impose a hefty tariff on Canadian lumber.”
“The March sales numbers are the second highest on record since the Great Recession, which is especially encouraging considering the poor weather conditions throughout many parts of the country,” adds Robert Dietz, chief economist for NAHB. “With tight existing-home inventory, rising household formations and continued job creation, we can expect further growth in new home sales moving forward.”
Regionally, new home sales increased 25.8% in the Northeast, 16.7% in the West and 1.6% in the South. Sales fell 4.5% in the Midwest.
CoreLogic: U.S. Home Prices Continued To Climb In March
U.S. home prices increased 1.6% in March compared with February and increased 7.1% compared with March 2016, according to CoreLogic’s home price index report.
The firm notes that it revised its estimates for February.
As of the end of March, U.S. home prices were 2.8% within the peak set in June 2006. It should be noted that the report represents the average U.S. home price – home prices are increasing across most of the country, but pockets remain where home prices are far below the peak set in the pre-crisis years.
Currently, CoreLogic is forecasting that home prices will increase 0.6%, on average, between March and April and rise 4.9% from March 2017 to March 2018.
“With a forecasted increase of almost five percent over the next 12 months, the index is expected to reach the previous peak during the second half of this year,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “Prices in more than half the country have already surpassed their previous peaks, and almost 20 percent of metropolitan areas are now at their price peaks. Nationally, price growth has gradually accelerated over the past half-year, while rent growth for single-family rental homes has slowly decelerated over the same period, according to the CoreLogic Single-family Rental Index, recording a three percent rise over the year through March.”
“A potent mix of strong job gains, household formation, population growth and still-attractive mortgage rates in the face of tight inventories are fueling a continuing surge in home prices across the U.S.,” adds Frank Martell, president and CEO of CoreLogic. “Price gains were broad-based, with 90 percent of metropolitan areas posting year-over-year gains. Major metropolitan areas were especially hot, with CoreLogic data indicating that four of the largest 10 markets are now overvalued.