Existing home sales soar to highest pace in more than a decade

Posted April 22, 2017

The National Association of Realtors (NAR) reports that the seasonally adjusted annual rate of existing home sales in March rose 4.4% to a seasonally adjusted annual rate of 5.71 million from a downwardly revised total of 5.47 million in February.

This month's sales pace is 5.9 percentage points above March 2015 and is the fastest SAAR sales pace since February 2007.

Economists polled by Reuters had forecast sales increasing 2.5 percent to a pace of 5.60 million units in March.

Home loan costs had been climbing after President Donald Trump won the November election, under the belief that the government would engage in forms of stimulus such as tax cuts and greater deficits that could cause higher levels of inflation.

"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. Listing shortages are an ongoing source of frustration for the housing industry, since sales might be higher if buyers weren't struggling to find available homes in desirable locations at palatable price points. "Sales may be soaring, but inventory isn't".

With supply still tight, the median house price rose 6.8 percent from one year ago to US$236,400 in March, the 61st consecutive month of year-on-year price increases. Total housing inventory at the end of March was up 5.8 percent to 1.83 million existing homes available for sale.

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Properties typically stayed on the market for 34 days in March, a big drop from 45 days in February and 47 days a year ago.

The housing market needs more inventory for sales to pick up meaningfully, he notes. First-time home buyers also made little progress, accounting for 32% of the market. Stripping out those adjustments, sales were 7.3 percent higher than in March 2016.

Region-wise, activity in sales rebounded throughout most regions, growing in the Northeast, Midwest and South by 10.1 percent, 9.2 percent and 3.4 percent respectively.

Mortgage buyer Freddie Mac said Thursday that the average interest rate on 30-year fixed-rate home loans declined to 3.97 percent this week from 4.08 percent last week.

In the West, existing-home sales decreased 1.6 percent to an annual rate of 1.22 million. "Over the previous year home sales under $100,000 fell 7.1 percent while sales between $500,000 and $750,000 went up by 32.1 percent, due to builders' focus on the higher-end market".