Existing home sales slumped last month under the weight of elevated mortgage rates.
Existing home sales receded by 4.3% in March to a seasonally adjusted annual rate of 4.19 million, down from 4.38 million in February, according to a report released Thursday by the National Association of Realtors (NAR). Year over year, sales fell by 3.7%.
The median price for all types of existing homes rose to $393,500, an increase of 4.8% from the median price of $375,300 one year ago. Existing home sales posted a year-over-year price gain for the ninth consecutive month and reached the highest price ever for the month of March. Sales slumped in every region except for the Northeast.
“Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves,” NAR chief economist Lawrence Yun said in a statement. “There are nearly six million more jobs now compared to pre-COVID highs, which suggests more aspiring home buyers exist in the market.”
The inventory of existing homes has been steadily increasing, despite elevated mortgage rates. At the end of March, total housing inventory sat at 1.11 million units, up 4.7% from February and up 14.4% from one year ago. Meanwhile, unsold inventory sat at a 3.2-month supply at the current sales pace, up from 2.9 months in February and 2.7 months in March 2023.
As of April 12, there were 526,000 active single-family listings on the market, up 2.6% from the previous week, according to Altos Research data. This uptick in inventory is a function of high and rising mortgage rates, according to Mike Simonsen, founder and president of Altos Research.
“More inventory is always welcomed in the current environment,” Yun added. “Frankly, it’s a great time to list with ongoing multiple offers on mid-priced properties and, overall, home prices continuing to rise.”
Meanwhile, new construction of both single-family and multifamily homes receded in March. Homebuilder confidence also stagnated in April due to elevated mortgage rates, coupled with a stronger-than-expected inflation reading.
“Prospective home buyers face a very confusing housing market,” Bright MLS chief economist Lisa Sturtevant said in a statement. “Mortgage rates, which had been expected to fall in 2024, have inched up close to 7% and seem poised to remain higher for longer.
“Inventory has started to increase, but the market is still competitive with sellers still getting multiple offers. And now, in the wake of the proposed NAR settlement, there is new confusion about how buyers and sellers will work with a real estate agent.”
