Sales of existing homes edged lower in March as mortgage rates climbed, the National Association of Realtors (NAR) said Thursday.
In its monthly report, the NAR said total existing-home sales — completed transactions that include single-family homes, townhomes, condominiums and co-ops — fell 2.4% from February to a seasonally adjusted annual rate of 4.44 million in March.
Year-over-year, sales declined 22% from 5.69 million in March 2022.
Month-over-month sales declined in three of the four major U.S. regions, remaining steady in the Northeast. All four regions posted year-over-year decreases.
Mortgage Rate Sensitivity
"Home sales are trying to recover and are highly sensitive to changes in mortgage rates," said NAR Chief Economist Lawrence Yun. "Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand. It's a unique housing market."
Total housing inventory registered at the end of March was 980,000 units, up 1.0% from February and 5.4% from one year ago (930,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, unchanged from February but up from 2.0 months in March 2022.
"Home prices continue to rise in regions where jobs are being added and housing is relatively affordable," Yun noted. "However, the more expensive areas of the country are adjusting to lower prices."
The median existing-home price for all housing types in March was $375,700, down 0.9% from $379,300 a year earlier. Prices climbed slightly in three regions but fell in the West.
Properties typically remained on the market for 29 days in March, down from 34 days in February but up from 17 days in March 2022. Of the homes sold in March, 65% were on the market for less than a month, NAR said.
First-time buyers were responsible for 28% of sales in March, up from 27% in February but down from 30% in March 2022. NAR's 2022 Profile of Home Buyers and Sellers — released in November — found that the annual share of first-time buyers was 26%, the lowest since NAR began tracking the data.
All-cash sales accounted for 27% of transactions in March, down from 28% in both February and a year earlier. Individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in March, down from 18% in both February and a year earlier.
Distressed sales — defined as foreclosures and short sales — represented 1% of sales in March, nearly identical to last month and one year ago.
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.27% as of April 13. That's down from 6.28% from the previous week but up from 5% one year ago.
"With overall consumer price inflation calming and rents expected to decelerate from robust apartment construction, the Federal Reserve's monetary policy will surely shift from tightening to neutral to possibly loosening over the next 12 months," Yun added. "Therefore, home sales will steadily rebound despite several months of fluctuations."
Realtor.com Chief Economist Danielle Hale said affordability is a major hurdle for a range of potential home buyers.
“Affordability is not only an issue for first-time homebuyers, but also for many repeat buyers who still need to take on a mortgage,” Hale said. “A recent survey showed that 82% of potential sellers needing to sell and buy felt ‘locked in’ by their existing low mortgage rate. This suggests that both existing home supply and demand will be sensitive to mortgage rate changes. While both the total inventory of unsold homes (+5.4%) and months supply (+0.6) climbed year over year, both measures remain lower than pre-pandemic norms.”
She added that, despite climbing inventory, “affordability continues to weigh down home-price growth. Nationwide, prices shrank for a second month as buyers continue to be selective and budget-conscious about the homes on which they are submitting offers.”
Sales By Type
Single-family home sales faded to a seasonally adjusted annual rate of 3.99 million in March, down 2.7% from 4.1 million in February and 21.1% from a year ago. The median existing single-family home price was $380,000 in March, down 1.4% from March 2022.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 450,000 units in March, identical to February but down 28.6% from the previous year. The median existing condo price was $337,300 in March, an annual increase of 2.1%.
Sales By Region
- Existing-home sales in the Northeast were at an annual rate of 520,000 in March, unchanged from February but down 21.2% from March 2022. The median price was $395,400, up 1% from one year ago.
- In the Midwest, existing-home sales retracted 5.5% from a month ago to an annual rate of 1.03 million in March, falling 17.6% from the previous year. The median price in the Midwest was $273,400, up 1.7% from YOY.
- Existing-home sales in the South receded 1% in March from February to an annual rate of 2.07 million, a 20.4% decrease from the prior year. The median price in the South was $347,600, an increase of 0.3% YOY.
- In the West, existing-home sales declined 3.5% from the previous month to an annual rate of 820,000 in March, down 30.5% from the prior year. The median price was $565,400, down 7.5% from March 2022.
NAR is America's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.
