Existing home sales experienced their highest pace recently in over ten years. Inventory levels still remain severely low and homes are spending less time on the market according to a recent report from the National Association of Realtors.
Total existing home sales, which are completed transactions of properties, increased by 4.4% recently in March which was 5.9% higher than numbers seen a year ago. This suprasses January as the best month of sales since February of 2007.
Chief economist for NAR, Lawrence Yun, shared that the significant gains were driven mostly by the Northeast and Midwest. “The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market and were successfully able to close on a home last month,” he said. “Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does.”
Housing supply by the end of March had increased, but was 6.6% lower lower than a year ago. Inventory today has been on the decline for 22 months year over year. Inventory for unsold properties is at a 3.8 month supply at the current pace.
Yun also shared, “Bolstered by strong consumer confidence and underlying demand, home sales are up convincingly from a year ago nationally and in all four major regions despite the fact that buying a home has gotten more expensive over the past year.”
Properties were actively on the market for typically for 34 days for the month of March. This was down from 45 days in February as well as from a year ago at 47. Forty eight percent of the homes that were sold in March were on the market for less than one month.
Increasing prices pose their challenges for all, but even more so for first time buyers. Despite this, Yun adds, “A growing pool of all types of buyers is competing for the lackluster amount of existing homes on the market. Until we see significant and sustained multi-month increases in housing starts, prices will continue to far outpace incomes and put pressure on those trying to buy.”
In the meantime mortgage rates have been rising with the average commitment rate for a 30 year conventional fixed rate at 4.2%. Buyer profiles consisted of 32% of sales for March being made up of first time buyers.
The best advice for home buyers this spring is to remain patient and to remember the right home will eventually become available.