March Existing Home Sales Lousy, As Expected

Existing home sales (units) declined again in March, down 7% year over year.  Prices dropped 12% year over year.  Inventory-months increased modestly.  NAR spin below.

The market continues to worsen, but at a slower rate.  This is the first sign of a bottoming process.  We still think prices will drop another 20% from here.

Here are the important numbers, with context  Charts (not updated for March) from Calculated Risk.  Check out Calculated Risk for updated charts and more detailed analysis here >

Existing Home Sales (seasonally adjusted): 4.57 million (down 3% m/m, 7% y/y, 45% distressed)

Existing Home Inventory: 3.74 million (slight drop)

Existing Home Inventory Months: 9.8 months (slight uptick)


Here’s the NAR’s spin:

Existing-home sales eased in March but first-time buyers are responding to low mortgage interest rates and tax credits, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 3.0 per cent to a seasonally adjusted annual rate1 of 4.57 million units in March from a downwardly revised level of 4.71 million in February, and were 7.1 per cent lower than the 4.92 million-unit pace in March 2008.

Lawrence Yun, NAR chief economist, said the market appears to be stabilizing with modest monthly ups and downs, and that first-time buyers are driving the market. “The share of lower priced home sales has trended up, indicating a return of many first-time buyers, which we also see in a parallel member survey,” he said. “Sales in the upper price ranges remain stalled because of higher interest rates on jumbo loans.”

Although prices rose from February to March, the national median existing-home price2 for all housing types was $175,200, down 12.4 per cent from March 2008. The price increase from February to March was 4.2 per cent, which is much higher than the typical 1.8 per cent seasonal increase between those two months. Distressed properties, which accounted for just over half of all transactions in March, typically are selling for 20 per cent less than traditional homes.

An NAR practitioner survey in March showed first-time buyers accounted for 53 per cent of transactions, based largely on contracts offered before the $8,000 first-time home buyer tax credit became available. “Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit,” Yun said. “By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions.”

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said first-time buyers are crucial at this stage of a housing recovery. “The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down, according to their needs,” he said.

“Although homeownership builds wealth over the long term, buyers need to evaluate their options. In this market, buyers and sellers who use a Realtor® to represent them are making a smart move,” McMillan said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 5.00 per cent in March from 5.13 per cent in February; the rate was 5.97 per cent in March 2008; data collection began in 1971.

“Record-high housing affordability conditions are helping markets recover, with home sales higher than a year ago in Minneapolis, Northern Virginia, Las Vegas, Phoenix and most areas of California and Florida.”

Total housing inventory at the end of March fell 1.6 per cent to 3.74 million existing homes available for sale, which represents a 9.8-month supply3 at the current sales pace, compared with a 9.7-month supply in February.

Single-family home sales slipped 2.8 per cent to a seasonally adjusted annual rate of 4.10 million in March from a pace of 4.22 million in February, and are 5.7 per cent below the 4.35 million-unit pace in March 2008. The median existing single-family home price was $174,900 in March, which is 11.5 per cent lower than a year ago.

Existing condominium and co-op sales fell 4.1 per cent to a seasonally adjusted annual rate of 470,000 units in March from 490,000 in February, and are 17.8 per cent below the 572,000-unit pace a year ago. The median existing condo price4 was $177,600 in March, down 18.7 per cent from March 2008.

Regionally, existing-home sales in the Northeast fell 8.0 per cent to an annual pace of 690,000 in March, and are 22.5 per cent below a year ago. The median price in the Northeast was $231,700, down 18.4 per cent from March 2008.

Existing-home sales in the Midwest were unchanged in March at a pace of 1.04 million but are 11.1 per cent lower than March 2008. The median price in the Midwest was $141,300, which is 6.1 per cent below a year ago.

In the South, existing-home sales slipped 1.7 per cent to an annual pace of 1.71 million in March and are 10.9 per cent below a year ago. The median price in the South was $146,900, down 12.2 per cent from March 2008.

Existing-home sales in the West declined 4.2 per cent to an annual rate of 1.13 million in March but are 18.9 per cent higher than a year earlier. The median price in the West was $252,400, which is 11.1 per cent below March 2008.

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