Existing Home Sales Decline in March

After reaching the 12-month high last month, existing home sales retreated in March due to lingering high mortgage rates, according to the National Association of Realtors (NAR). Meanwhile, low resale inventory and strong demand continued to drive up existing home prices, marking the ninth consecutive month of year-over-year median sales price increases. Eventually, mortgage rates are expected to decrease gradually, leading to increased demand in the coming quarters. However, that decline is dependent on future inflation reports.

Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, declined 4.3% to a seasonally adjusted annual rate of 4.19 million in March (as shown below). On a year-over-year basis, sales were 3.7% lower than a year ago.

The first-time buyer share rose to 32% in March, up from 26% in February 2023 and from 28% in March 2023. The inventory level rose from 1.06 million in February to 1.11 million units in March and is up 14.4% from a year ago.

At the current sales rate, March unsold inventory sits at a 3.2-months supply, up from 2.9-months last month and 2.7-months a year ago. This inventory level remains very low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction.

Homes stayed on the market for an average of 33 days in March, down from 38 days in February but up from 29 days in March 2023.

The March all-cash sales share was 28% of transactions, down from 33% in February but up from 27% a year ago. All-cash buyers are less affected by changes in interest rates.

The March median sales price of all existing homes was $393,500, up 4.8% from last year. This marked the highest recorded price for the month of March. The median condominium/co-op price in March was up 5.8% from a year ago at $357,400.

Existing home sales in March were mixed across the four major regions (as shown below). Sales in the Midwest, South, and West decreased 1.9%, 5.9%, and 8.2% in March, while sales in the Northeast rose 4.2%. On a year-over-year basis, all four regions saw a decline in sales, ranging from -1.0% in the Midwest to -5.0% in the South.

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI fell from 75.6 to 74.4 in February. On a year-over-year basis, pending sales were 7.0% lower than a year ago per the NAR data.