Existing-home sales continued to slip in March from inventory constraints, which continue to push home prices up, according to data from the National Association of Realtors.
Existing-home sales dropped 0.6% to a seasonally adjusted annual rate of 4.92 million in March, compared to 4.95 million in February. However, this month’s numbers remain 10.3% higher than the 4.46 million-unit pace set in March 2012.
"Supply of existing homes on the market is still low, which is a negative for sales but a big plus for prices," said analysts at Econoday.
This marks the 21st consecutive month that sales have been above year-ago levels. Home prices have continued increasing for 13 straight months. These numbers reflect more demand than supply in the current market.
"Buyer traffic is 25% above a year ago when we were already seeing notable gains in shopping activity," said Lawrence Yun, NAR chief economist.
He added, "In the same timeframe housing inventories have trended much lower, which is continuing to pressure home prices. The good news is home construction is rising and low mortgage rates are continuing to keep affordability conditions at historically favorable levels. The bad news is that underwriting standards remain excessively tight, while renters are getting squeezed by higher rents."
At the end of March, total housing inventory rose 1.6% to 1.93 million existing homes available for sale, marking a 4.7-month supply at the current sales pace. February had a 4.6-month supply.
Market inventory remains 16.8% below one-year ago, when there was a 6.2-month supply.
"The inventory improvement last month results from a seasonal gain, but conditions continue to broadly favor sellers. We need a housing supply of over 6 months to have a generally balanced market between home buyers and sellers, but it’s unlikely we’ll get there without greater increases in housing construction," Yun said.
Nationwide, the median existing-home price for all housing types was $184,300 in March — 11.8% higher year-over-year. This increase represents the strongest jump since November 2005 when prices spiked 12.9% year-over-year.
The median time houses spent on the market was 62 days in March, down a startling 12 days from the median 74 days in February. This is a 32% decrease from 92 days in March 2012.
NAR President Gary Thomas said, "The typical home sold in March was on the market for one month less than it took to sell a year ago," he said. "Multiple bidding is becoming more common, and more homes are selling above the asking price, so buyers need to move quickly and follow their Realtor’s advice for contingencies when making contract offers."
"Today, April’s showers doused the hot housing market. This was not entirely unexpected, as housing inventories are lagging far behind demand. While this scenario is good for home values, it also has a detrimental effect on sales as consumers need choices when shopping for a home," said Quicken Loans Chief Economist Bob Walters.