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After an unexpected uptick in February, sales of existing homes dipped again in March as buyers contended with a market bereft of supply, according to data released Thursday by the National Association of Realtors.
Existing-home sales fell 2.4 percent between February and March to a seasonally adjusted annual rate of 4.44 million — 22 percent lower than they were a year earlier, according to NAR.
“Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” NAR Chief Economist Lawrence Yun said in a statement. “Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand. It’s a unique housing market.”
The downtick signaled a return to the trend of monthly declines that had abruptly reversed in February when existing-home sales unexpectedly shot up 14.5 percent — the first time in a year sales had not fallen.
Sales fell in all four major United States regions but for the Northeast where they remained unchanged from February at an annual rate of 520,000, down 21.2 percent from a year ago. Sales in the Midwest fell 5.5 percent from a month ago and were down 17.6 percent annually, while sales in the South retreated 1 percent monthly and 20.4 percent annually. The West saw sales decline 3.5 percent monthly and were down 30.5 percent from a year ago.
“Home prices continue to rise in regions where jobs are being added and housing is relatively affordable,” Yun said. “However, the more expensive areas of the country are adjusting to lower prices.”
The median price for existing homes in March was $375,700, a decline of 0.9 percent from March 2022 according to NAR data. Multiple sources have tracked year-over-year declines in home prices recently, including Redfin, which measured an annual price drop of 3 percent in March, the biggest annual drop it has measured since 2012.
Properties typically remained on the market for 29 days in March, down from 34 days in February, but up from just 17 days in March 2022. 65 percent of the homes sold in March were on the market for less than a month.
The 30-year fixed mortgage rate was hovering around 6.27 percent as of April 13 according to Freddie Mac, down from 6.28 percent the previous week but up from 5 percent a year ago.
Yun predicted that with inflation and rents both cooling gradually the Federal Reserve will shift its monetary policy within the next year, and that more home sales will follow.
“With overall consumer price inflation calming and rents expected to decelerate from robust apartment construction, the Federal Reserve’s monetary policy will surely shift from tightening to neutral to possibly loosening over the next 12 months,” he said. “Therefore, home sales will steadily rebound despite several months of fluctuations.”
Other experts predicted that more homes will come on to the market over the next 12 months as the days of 3 percent mortgage rates fade further into the past and reluctant sellers accept the reality of higher rates and list their homes.
“As we move further away from the days of 3 percent rates, existing homeowners will become less precious about their ultra-low monthly payments and new listings will slowly fill the market again,” Zillow Senior Economist Nicole Bachaud said in a statement.
