The median price of an existing home increased +15% y/y in March as supply dropped -9.5% y/y. Sales fell -4.5% y/y.
Home Prices Keep Rising
The already pricey market for buyers became even more pricey in March. The median price of an existing home sold in March hit $375,300, an increase of +15% y/y and the highest median price ever recorded by the National Association of REALTORS® (NAR).
Not only was the median price of an existing home that closed in March (and likely signed in January or February) at a record high, mortgage interest rates were beginning to rise within this same time frame. According to the Mortgage Daily News, the average rate on the 30-year fixed mortgage was 3.29% at the beginning of January and rose to 3.9% at the end of February. Now, the 30-year fixed rate stands at 5.35%.
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Translation? The average borrower is now paying approximately +38% more on a monthly mortgage payment than she/he would have paid for the same home one year ago, according to Realtor.com.
Sales Dwindling
Existing home sales dropped -2.7% m/m in March to a seasonally adjusted, annualized rate of 5.7M units, according to NAR. (February’s sales reading was revised downward from 6.02M units to 5.93M units.)
On a year-to-year basis, March sales decreased -4.5%.
Per usual, buyers seeking home priced between $100,000 – $250,000 had slim pickings. Sales within this price tier plunged -21% y/y. Buyers seeking homes priced between $750,000 – $1M had more inventory from which to choose and sales in this price tier increased +30% y/y. Homes priced above $1M saw a sales jump of +25% y/y.
Know that all-cash sales represented 28% of all sales in March, the highest share of cash sales since July 2014.
Supply of For-Sale Homes Dropped in March
There were 950,000 homes for sale at the end of March, a decline of -9.5% y/y. Due to continuing strong demand, particularly from Millennials, these 950,000 available homes represent a two-month supply at the market’s current sales pace.
Lawrence Yun, Chief Economist with NAR, said, “We know that the builders have been underproducing since the foreclosure crisis, which is the reason for this shortage. But when mortgage rates increase, we have seen (in past years) several months of inventory rising.”
The most recent weekly housing data update supports Yun’s statement (hope?) of increasing inventory. Danielle Hale, Chief Economist with Realtor.com, said, “A bit of good news for buyers as we are in what is typically the best time of year to list a home for sale. Combined with moderation in home sales, this should mean a greater number of options for remaining home searcher to choose from.”
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Thanks to CNBC.
