US existing home sales flat and price growth slowing, latest NAR data shows

Existing home sales in the United States were essentially flat in March, while the growth in home prices moderated, according to the latest data from the National Association of Realtors.

Sales gains in the Northeast and Midwest were offset by declines in the West and South and Lawrence Yun, NAR chief economist said that current sales levels are underperforming by historical standards.

Total slipped 0.2% to a seasonally adjusted annual rate of 4.59 million in March from 4.6 million in February, and are 7.5% below the 4.96 million unit pace in March 2013. Last month’s sales volume remained the slowest since July 2012, when it was 4.59 million.

‘There really should be stronger levels of home sales given our population growth. In contrast, price growth is rising faster than historical norms because of inventory shortages,’ Yun explained.

However, he expects some improvement in the months ahead. ‘With ongoing job creation and some weather delayed shopping activity, home sales should pick up, especially if inventory continues to improve and mortgage interest rates rise only modestly,’ he said.

The median existing home price for all housing types in March was $198,500, up 7.9% from March 2013 and the data also shows that distressed homes accounted for 14% of March sales, down from 16% in February and 21% in March 2013.

‘With rising home equity, we expect distressed homes to decline to a single-digit market share later this year,’ Yun added.

Some 10% of March sales were foreclosures and 4% were short sales. Foreclosures sold for an average discount of 18% below market value in March, while short sales were discounted 12%.

Total housing inventory at the end of March rose 4.7% to 1.99 million existing homes available for sale, which represents a 5.2 month supply at the current sales pace, up from five months in February. Unsold inventory is 3.1% above a year ago, when there was a 4.7 month supply.

The median time on market for all homes was 55 days in March, down from 62 days in February, and also 62 days on market in March 2013. Short sales were on the market for a median of 112 days in March, while foreclosures typically sold in 55 days and non-distressed homes took 53 days. Some 37% of homes sold in March were on the market for less than a month.

First time buyers accounted for 30% of purchases in March, up from 28% in February and the same as the 30% recorded in March 2013.

‘There are indications that the stringent mortgage underwriting standards are beginning to ease a bit, particularly regarding credit score requirements, but they remain a headwind for entry level and single income home buyers,’ said Steve Brown, NAR president.

‘We also have tight inventory in the lower price ranges where many starter homes are found, but rising new-home construction means some owners will be trading up and more existing homes will be added to the inventory. Hopefully, this will create more opportunities for first time buyers,’ he added.

All cash sales made up 33% of transactions in March compared with 35% in February and 30% in March 2013. Individual investors, who account for many cash sales, purchased 17% of homes in March, down from 21% in February and 19% in March 2013 and 71% of investors paid cash in March.

Single family home sales were unchanged at a seasonally adjusted annual rate of 4.04 million in March, the same as February, but are 7.3% below a year ago. The median existing single family home price was $198,200 in March, which is 7.4% above March 2013.

Existing condominium and co-op sales declined 1.8% to an annual rate of 550,000 units in March from and are 8.3% below in March 2013. The median existing condo price was $200,800 in March, up 11.6% from a year ago.

Regionally, existing home sales in the Northeast rose 9.1% but are 4.8% below March 2013. The median price in the Northeast was $244,700, up 3.2% from a year ago.

Existing home sales in the Midwest rose 4% in March but are 10.3% below a year ago. The median price in the Midwest was $149,600, which is 5.9% above March 2013.

In the South, existing home sales declined 3% in March, and also are 3% below March 2013. The median price in the South was $173,000, up 6.7% from a year ago.

Existing home sales in the West fell 3.7% in March, and are 13.4% below a year ago. The median price in the West was $289,300, which is 12.6% higher than March 2013.