Existing home sales decreased in March to a seasonally adjusted annual rate of 5.77 million, marking the second consecutive month of declines, according to the National Association of Realtors (NAR). Total existing sales, which includes single-family homes, townhomes, condominiums, and co-ops, decreased 2.7% from February and 4.5% on a year-over-year basis.
“The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power,” says Lawrence Yun, NAR’s chief economist. “Still, homes are selling rapidly, and home price gains remain in the double digits.”
With mortgage rates expected to continue to rise during 2022, Yun forecasts transactions will contract by 10%, for home prices to readjust, and for gains to grow around 5%.
“Home prices have consistently moved upward as supply remains tight,” Yun says. “However, sellers should not expect the easy profit gains and should look for multiple offers to fade as demand continues to subside.”
Total housing inventory at the end of March totaled 950,00 units, up 11.8% from February and down 9.5% from one year ago. Unsold inventory sits at a two-month supply at the present sales pace, up from 1.7 months in February and down 2.1 months compared with March 2021.
The median existing home price for all housing types in March was $375,300, up 15% compared with March 2021. According to the NAR, this marks the 121st consecutive month of year-over-year increases, the longest running streak on record.
The NAR says properties typically remained on the market for 17 days in March, down from 18 days in February. Eighty-seven percent of homes sold last month were on the market for less than a month.
First-time buyers were responsible for 30% of sales in March, an increase from 29% in February. NAR’s Profile of Home Buyers and Sellers reported the annual share of first-time buyers was 34%.
“It appears first-time home buyers are still looking to lock in at current mortgage rates before they inevitably increase,” says Yun. “With rising mortgage rates, cash sales made up a larger fraction of transactions, climbing to the highest share since 2014.”
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.17% in March, up from 3.76% in February. The average commitment rate across all of 2021 was 2.96%.
Single-family home sales decreased to a seasonally adjusted annual rate of 5.13 million in March, down 2.7% from February and down 3.8% on a YOY basis. The median existing single-family home price was $382,000 in March, a 15.2% increase from March 2021.
According to the NAR, the greatest YOY median list price growth occurred in Miami (+37%), Las Vegas (+35.2%), and Tampa, Florida (+32.0%). Austin, Texas, posted the highest growth in the share of homes that had their prices reduced compared with last year, followed by Sacramento, California, and Memphis, Tennessee.
Existing home sales decreased in three of the four major U.S. regions in March and decreased in each region on a YOY basis.
Existing home sales decreased 2.9% in the Northeast compared with February and decreased 11.8% compared with March 2021. Sales in the Midwest declined 4.5% from the prior month and 3.1% from March 2021.
The South experienced an existing home sales decline of 3% in March from the prior month and a decrease of 3% on a YOY basis. For the seventh straight month, the South experienced the highest pace of price appreciation in comparison to the other three regions in the U.S.
Existing home sales in the West held steady in March compared with February but decreased 4.7% from March 2021.
