Existing-home sales slid back in March, and price improvements continued to moderate, according to transaction data released Tuesday.
According to estimates from the National Association of Realtors (NAR), total existing-home sales in March came in at a seasonally adjusted annual rate of 4.59 million, a 0.2 percent slip from February’s downwardly revised pace of 4.60 million and hitting a nearly two-year low. Compared to March 2013, the sales rate was down 7.5 percent.
Removing figures for co-ops, condominiums, and townhouses, single-family existing-home sales were at a rate of 4.04 million last month, flat from February but down 7.3 percent compared to a year prior.
Though the group remains optimistic for activity in the coming months, NAR chief economist Lawrence Yun admitted sales at the moment are underperforming by historical standards.
“There really should be stronger levels of home sales given our population growth,” Yun said. “In contrast, price growth is rising faster than historical norms because of inventory shortages.”
Still, Yun added, “With ongoing job creation and some weather delayed shopping activity, home sales should pick up, especially if inventory continues to improve and mortgage interest rates rise only modestly.”
By NAR’s measure, the median existing-home price for all housing types in March was $198,500, an increase of 7.9 percent year-over-year. While high in historical contexts, the increase is a step down from February’s reported 9.1 percent annual gain.
The rise may in part be attributed to a 4.7 percent improvement in total housing inventory, which was estimated at 1.99 million existing homes as of March 31.
On the other hand, contributing to the ongoing—albeit slower—growth in home prices was a drop in distressed home sales, which accounted for 14 percent of total March transactions compared to 16 percent in February. With home equity on the rise, Yun expects distressed homes to decline to a single-digit market share by the end of the year.
While the latest report showed continued softening in home sales, there were a few bright spots: According to NAR, first-time buyers accounted for 30 percent of home purchases in March, up from 28 percent in February, though still weak overall.
“There are indications that the stringent mortgage underwriting standards are beginning to ease a bit, particularly regarding credit score requirements, but they remain a headwind for entry-level and single-income home buyers,” said Steve Brown, NAR president.
Meanwhile, all-cash sales—typically investors, though not always—comprised one-third of March transactions, down slightly from February. Individual investors made up 17 percent of purchases.