Existing-home sales down 2.7%, marking the second consecutive decline
March sees existing-home sales continue slide
For the second month in a row, existing home sales dropped in March, down 2.7% from February. Compared to March of 2021, sales activity was down 4.5%. According to the National Association of Realtors® (NAR), total existing-home sales were at a seasonally adjusted annual rate of 5.77 million in March, compared to 6.04 million last year.
Regionally, only the West saw some reprieve, as sales there held steady from last month. The Northeast, Midwest and South were all down.
- Northeast: down 2.9% to an annual rate of 670,000—11.8% lower than last year
- Midwest: down 4.5% to an annual rate of 1,270,000—3.1% lower than last year
- South: down 3.0% to an annual rate of 2,620,000—3.0% lower than last year
- West: steady at 0% change at an annual rate of 1,210,000—4.7% lower than last year
There were a couple of familiar culprits for the decline: rising mortgage rates and low inventory. But new economic factors are weighing down homebuyers’ ambitions.
"The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power," said Lawrence Yun, NAR's chief economist. "Still, homes are selling rapidly, and home price gains remain in the double-digits."
Revisiting the inventory issue
No discussion of the real estate market can happen without acknowledging the lack of homes for sale. It’s been an issue since before the pandemic and was only made worse by the economic conditions brought on by COVID-19.
Inventory was up an encouraging 11.8% from February. But that still marks a decrease from last March of 9.5%. There is currently a 2-month supply of unsold inventory at the present sales pace, again, up from last month but down from last year. Properties average 17 days on the market, one day faster than February and March of 2021.
And this lack of supply continues to drive up home prices.
Home prices still filled with helium
Home prices are up 15.1% from a year ago, continuing their flight into the stratosphere. Just look at these year-over-year numbers:
- March 2019: $259,700
- March 2020: $280,600
- March 2021: $326,300
- March 2022: $375,300
That’s over $115,000 in increase of the median home price in just four years, showing that homeownership is still a smart investment. But these prices, couples with the rising mortgage rates, have cooled the market somewhat.
"Home prices have consistently moved upward as supply remains tight," Yun said. "However, sellers should not expect the easy-profit gains and should look for multiple offers to fade as demand continues to subside." Yun expects fewer home sales this year, dropping by about 10% from last year. He also sees home prices growth slowing, only rising by 5% for the rest of the year.
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