• First American Financial Corporation released its March 2016 Potential Home Sales model. According to the model, existing-home sales are underperforming by 11.5 percent.
  • According to the report, the underperformance is due to sellers worries about buying. Therefore, they won't be selling either.
  • On the bright side, NAR is predicting that actual existing-home sales numbers will rebound in March in April. Furthermore, lowering mortgage rates are calming sellers' worries.

On Thursday, First American Financial Corporation released its March 2016 Potential Home Sales model. According to First American’s press release, the model provides a gauge on whether existing-home sales are under or over their long-run potential level based on current market fundamentals.

For March, existing-home sales are underperforming by 11.5 percent, which translates into approximately 664,000 seasonally adjusted, annualized rate (SAAR) sales.

0414016_PHS_graphic

Fleming says actual existing-home sales, as seen in the National Association of Realtor’s latest Pending Home Sales Index, are predicted to rebound in March and April. Moreover, Fleming says lowering mortgage rates should make sellers feel at ease.

“Luckily, mortgage rates are trending even lower as investor demand for the 10-year Treasury bill due to continued global economic and geopolitical uncertainty has driven the yield further down. The persistent low-rate environment is a blessing in disguise for homebuyers as they are able to further leverage their income into continued strong and even increasing homebuying power,” said Fleming.

“In a market with falling confidence, low inventory and rising prices, the positive impact of low mortgage rates on consumer buying power is a silver lining for existing homeowners and first-time homebuyers alike.”

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