Existing home sales saw an uptick in March growing 1.1 percent to 5.6 million from 5.54 million in February according to the latest existing-home sales data released by the National Association of Realtors (NAR) on Monday.
However, sales remained 1.2 percent below the same period last year as a shortage of inventory and affordability constraints kept sales activity below the 2017-levels, the report indicated. The monthly existing-home sales data by NAR includes completed transactions for single-family homes, townhomes, condominiums, and co-ops.
According to the data, the median price of existing homes in March was $250,400 and marked an increase of 5.8 percent from $236,600 recorded in March 2017. The price increase in March 2018 marked the seventy-third consecutive month of year-over-year price gains.
“Although the strong job market and recent tax cuts are boosting the incomes of many households, speedy price growth is squeezing overall affordability in several markets—especially those out West,” said Lawrence Yun, Chief Economist at NAR.
A shortage of supply of existing homes is another factor that has kept home sales below the year-ago level according to Yun. “Robust gains last month in the Northeast and Midwest – a reversal from the weather-impacted declines seen in February – helped overall sales activity rise to its strongest pace since last November at 5.72 million,” he said. “The unwelcoming news is that while the healthy economy is generating sustained interest in buying a home this spring, sales are lagging year-ago levels because supply is woefully low and home prices keep climbing above what some would-be buyers can afford.”
By the end of March, total housing inventory climbed 5.7 percent to 1.67 million existing homes available for sale but was still 7.2 percent lower than the same period a year ago, NAR’s data indicated. Inventory has fallen year-over-year for 34 consecutive months now and unsold inventory is at a 3.6 month supply at the current sales pace.
Shortage of inventory has also led to stiff competition as buyer demand continues to grow, NAR said. According to the report, properties stayed on the market for 30 days in March, down from 37 days in February and 34 days last year. In fact, the report said, 50 percent of homes sold in March were on the market for less than a month.
Yun pointed out that real estate agents were seeing the seasonal ramp-up in buyer demand, but without the commensurate increase in new listings coming onto the market. “As a result, competition is swift and homes are going under contract in roughly a month, which is four days faster than last year and a remarkable 17 days faster than March 2016,” he said.