The National Association of REALTORS ® (NAR) indicated that residential home sales fell -4.9% m/m to a seasonally adjusted rate of 5.2M in March 2019 from 5.4M in March 2018. This drop followed a +11.2 gain in home sales during February 2019, the largest gain in home sales in more than 3 years.
Overall, California, with its higher than most home prices, sustained the biggest drop in sales of -11%, according to the California Association of REALTORS.
According to Bloomberg News, March was the fourth month in five that home sales figures were down despite the economy having everything going for it at least on paper…mortgage interest rates were lower, wage gains were sustained and home price appreciation was slower.
NAR said that the overall drop in home sales was partly due to the slowdown in sales among the most expensive properties. The top tiers of the housing market suffered sales drops of -11% for homes priced at $1M+ and drops of -6% for homes priced at the $750,000 – $999,999 levels.
Home sales at the bottom tier of the market also fell in March 2019 despite high demand. The cause in this case, according to NAR, was due to lack of inventory. NAR’s vice president of demographics and behavioral insights, Jessica Lautz, said, “More inventory is needed at the lower end (of the market) and a price reduction may be needed at the upper end.”
Other experts indicated that the drop in home sales was due to the 2017 Tax Bill changes to SALT (State and Local Taxes) deductions. (The Tax Bill capped SALT deductions at $10,000.)
More bad news came from a recent government report, HousingWire did not specify which government report, that indicated housing starts fell to its slowest pace since May 2017. Though new construction is just 10%-11% of the housing market, housing starts are a key indicator of market health.
Lastly, NAR predicts that home sales will accelerate later this year.