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Home sales fall slightly in the US but prices still trending upwards

Sales have been above year ago levels for 21 consecutive months, while prices show 13 consecutive months of year on year increases.

NAR chief economist, Lawrence Yun, said there is now more demand than supply in the current market. ‘Buyer traffic is 25% above a year ago. In the same time frame housing inventories have trended much lower, which is continuing to pressure home prices,’ he pointed out.

‘The good news is home construction is rising and low mortgage rates are continuing to keep affordability conditions at historically favourable levels. The bad news is that underwriting standards remain excessively tight, while renters are getting squeezed by higher rents,’ he added.

The national median existing home price for all housing types was $184,300 in March, which is 11.8% higher than March 2012. The March increase is the strongest since November 2005 when it rose 12.9% from a year earlier, and the last time there were 13 consecutive months of year on year price increases was from May 2005 to May 2006.

Distressed homes, that is foreclosures and short sales, accounted for 21% of March sales, down from 25% in February and 29% in March 2012. Some 13% of March sales were foreclosures, and 8% were short sales. Foreclosures sold for an average discount of 15% below market value in March, while short sales were discounted 13%.

Total housing inventory at the end of March increased 1.6% to 1.93 million existing homes available for sale, which represents a 4.7 month supply at the current sales pace, up from 4.6 months in February. Listed inventory remains 16.8% below a year ago when there was a 6.2 month supply.

‘The inventory improvement last month results from a seasonal gain, but conditions continue to broadly favour sellers. We need a housing supply of over six months to have a generally balanced market between home buyers and sellers, but it's unlikely we'll get there without greater increases in housing construction,’ Yun said.

‘The typical home sold in March was on the market for one month less than it took to sell a year ago. Multiple bidding is becoming more common, and more homes are selling above the asking price,’ said NAR president Gary Thomas.

The median time on market for all homes was 62 days in March, down from 74 days in February and is 32% below 91 days in March 2012. Short sales were on the market for a median of 81 days, while foreclosures typically sold in 46 days and non-distressed homes took 66 days. Some 37% of all homes sold in March were on the market for less than a month.

First time buyers accounted for 30% of purchases in March, unchanged from February and less than the 33% recorded in March 2012. All cash sales accounted for 30% of transactions in March, down from 32% in February and less than the 32% from March 2012. Individual investors, who account for most cash sales, purchased 19% of homes in March, down from 22% in February and 21% in March 2012.

Single family home sales slipped 0.2% to a seasonally adjusted annual rate of 4.32 million in March from 4.33 million in February, but are 9.1% above the 3.96 million unit level in March 2012. The median existing single family home price was $185,100 in March, up 12.1% from a year ago.

Existing condominium and co-op sales fell 3.2% to an annualized rate of 600,000 units in March from 620,000 in February, but are 20% higher than the 500,000 unit pace a year ago. The median existing condo price was $178,900 in March, which is 10.4% above March 2012.

Regionally, existing home sales in the Northeast were unchanged at an annual rate of 630,000 in March and are 6.8% above March 2012. The median price in the Northeast was $237,000, up 3% from a year ago.

Existing home sales in the Midwest rose 1.8% in March to a pace of 1.16 million and are 14.9% above a year ago. The median price in the Midwest was $141,800, up 7.8% from March 2012.

In the South, existing home sales slipped 1.5% to an annual level of 1.95 million in March but are 12.7% above March 2012. The median price in the South was $161,700, which is 10.4% above a year ago.

Existing home sales in the West declined 1.7% to a pace of 1.18 million in March but are 4.4% above a year ago. With notably constrained inventory conditions, the median price in the West rose to $258,100, up 26.1% from March 2012.

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