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Existing home sales fall due to lack of housing inventory

Home prices increased in every region in March

For the second consecutive month, existing-home sales fell, according to the latest National Association of Realtors report.

Transactions decreased 3.7% in March, which also saw record-high home prices and gains. All four major U.S. regions experienced month-over-month drops, and all four areas saw year-over-year gains in home sales. Sales in March overall climbed year-over-year, up 12.3% from a year ago — and from 5.35 million to 6.01 million.

The median existing-home price for all housing types in March was $329,100, up 17.2% from March 2020 ($280,700), as prices increased in every region. March’s national price jump marks 109 straight months of year-over-year gains.

“Consumers are facing much higher home prices, rising mortgage rates, and falling affordability, however, buyers are still actively in the market,” said Lawrence Yun, NAR chief economist. “The sales for March would have been measurably higher, had there been more inventory.”

Total housing inventory at the end of March amounted to 1.07 million units, up 3.9% from February’s inventory but down 28.2% from one year ago (1.49 million). Unsold inventory sits at a 2.1-month supply at the current sales pace, up slightly from February’s 2-month supply and down from the 3.3-month supply recorded in March 2020.

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Builders are still struggling with high lumber costs, crippling new builds throughout the country.

“The severe lack of existing homes on the market is finally having a big effect on sales, with March sales down from February, which dropped from January,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Demand is still strong as judged by multiple offers on houses, sometimes well into the double digits in many markets. The lack of homes for sale continues to push prices up to record levels, putting homeownership out of reach for more and more Americans.”

Even with low inventory, Yun said that the country’s economic and housing outlook is promising, with reports showing that at least half of the adult U.S. population have received a COVID-19 vaccination.

“Recent housing starts and job creation data show encouraging dynamics of more supply and strong demand in the housing sector,” Yun said.

Added Matthew Speakman, Zillow economist: “The sales outlook remains bright. Demand for housing remains very high as a wave of eager shoppers stoke competition for homes, pushing prices up quickly and time on market down precipitously.”

First-time buyers were responsible for 32% of sales in March, up from 31% in February and down from 34% in March 2020. Individual investors and second-home buyers purchased 15% of homes in March, down from 17% in February and up from 13% in March 2020.

Single-family home sales decreased to a seasonally-adjusted annual rate of 5.30 million in March, down 4.3% from 5.54 million in February, and up 10.4% from one year ago. The median existing single-family home price was $334,500 in March, up 18.4% from March 2020.

In looking at each of the country’s four major regions, March 2021 saw existing-home sales in the Northeast slip 1.3%, recording an annual rate of 760,000. That’s still a 16.9% jump from a year ago.

The median price in the Northeast was $364,800, up 21.4% from March 2020.

Existing-home sales in the Midwest declined 2.3% to an annual rate of 1,280,000 in March, a 0.8% rise from a year ago. The median price in the Midwest was $248,200, a 13.5% increase from March 2020.

Existing-home sales in the South dropped 2.9%, recording an annual rate of 2,700,000 in March, up 15.9% from the same time one year ago. The median price in the South was $283,900, a 15.6% climb from a year ago.

Existing-home sales in the West fell 8.0% from the month prior, posting an annual rate of 1,270,000 in March, a 15.5% rise from a year ago. The median price in the West was $493,300, up 16.8% from March 2020.

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