Existing home sales fell 2.7% in March

 

ARLINGTON, Va.—Existing home sales fell 2.7% in March to a seasonally adjusted annual rate of 5.77 million annualized units, representing a 4% decrease in sales compared to last year.

“Existing home sales fell again in March. The inventory-to-sales ratio rose slightly but remains extremely depressed,” said NAFCU Chief Economist and Vice President of Research Curt Long. “Despite the surge in mortgage rates, the market remains demand-heavy. Many would-be sellers are likely reluctant to part with two valuable assets: their current home and their mortgage rate."

Based on current month sales, there were 2.0 months of supply in March, up slightly from 1.7 months in February. Analysts consider six months of inventory a rough balance between supply and demand.

Sales fell in most regions last month, with the Midwest falling by 4.5% on the month, followed by the South (-3%), and the Northeast (-2.9%). The West saw no change.

Rising Rates Being Felt

“There is evidence that demand is cooling due to higher mortgage rates," noted Long. "Fannie Mae's Home Purchase Sentiment Index found that an all-time low net share of respondents say it is a good time to buy a home right now.

"But it will take more demand destruction to find a balanced market, and until then prices will continue to surge and affordability conditions will continue to deteriorate," concluded Long. "First-time homebuyers represented 30% of sales in March, which was two percentage points lower than March 2021. NAFCU expects home sales totals to trend flat this year due to higher rates and inventory shortages."

Of note, the median existing-home price, non-seasonally adjusted, rose to $375,300 in March, which is 15% higher than last year.