Existing home sales backtracked by 4.3% month over month in March to a seasonally adjusted annual pace of 4.19 million units, the National Association of Realtors (NAR) reported.
The retreat wasn’t shocking given the recent upward movement of mortgage rates after a few thorny inflation reports to start 2024 and the decrease in mortgage purchase applications recorded in February. Both single-family and condo/co-op sales slid from February, with the former declining by 4.3% and the latter losing 4.9%. Overall sales were down year on year as well, dropping by 3.7%.
Actual resales undershot expectations slightly, with economists polled by Reuters projecting an annualized pace of 4.20 million units.
Homebuying remains up in the first quarter of 2023 thanks to solid resale gains in January and February. The average existing home sales rate for the first three months of the year is a solid 4.2 million units, up from the dismal 3.85-million-unit pace of last year.
Persistent affordability issues, however, appear to have curbed momentum and left sales in a rut despite pent-up demand. The median existing home price in March was $39,500, up 4.8% from March 2023, with rates only exacerbating price-related headaches for would-be buyers.
“Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves,” said Lawrence Yun, NAR chief economist. “There are nearly six million more jobs now compared to pre-COVID highs, which suggests more aspiring home buyers exist in the market.”
More rate-related roadblocks, unfortunately, lie ahead; mortgage rates topped 7% for the first time in 2023 during the week ending April 18. Still, with a healthy economy underpinning bottled-up demand, observers are hopeful that the existing home market should weather the storm and gradually inch upwards.
For one thing, while inventory remains very constrained, the arrow is pointing north. There were 1.11 million units for sale at the end of March, up 4.7% month over month and 14.4% year over year. Unsold inventory is at a 3.2-month supply at the current sales pace, up from 2.9 months in February and 2.7 months in March last year.
“More inventory is always welcomed in the current environment,” said Yun. “Frankly, it’s a great time to list with ongoing multiple offers on mid-priced properties and, overall, home prices continuing to rise.”
