March Sees Another Dip in U.S. Home Sales

U.S. Existing-Home Sales Experience Modest Decline in March

The latest data released by the National Association of Realtors reveals a slight downturn in existing-home sales for the month of March 2023. While sales remained steady in the Northeast, three out of four major regions witnessed a dip in month-over-month sales. Across all regions, there was a notable decline in sales compared to the same period last year.

In March, total existing-home sales, encompassing single-family homes, townhomes, condominiums, and co-ops, reached a seasonally adjusted annual rate of 4.44 million, marking a 2.4% decrease from February. Year-over-year, sales witnessed a more significant drop of 22.0%, down from 5.69 million in March 2022.

NAR Chief Economist Lawrence Yun commented on the market dynamics, noting its sensitivity to mortgage rate fluctuations. He highlighted the prevalence of multiple offers on starter homes, indicating a demand-supply imbalance that necessitates increased inventory to meet market needs.

Inventory levels saw a modest increase, with 980,000 units available at the end of March, up 1.0% from February and 5.4% from the previous year. However, the unsold inventory translated to a 2.6-month supply at the current sales pace, consistent with February but higher than the 2.0 months recorded in March 2022.

Yun further observed regional variations in home price trends, with affordable regions experiencing price growth driven by job additions. However, pricier areas are adjusting to lower prices, contributing to the overall median existing-home price decline to $375,700, down 0.9% from March 2022.

Properties spent an average of 29 days on the market in March, a decrease from February’s 34 days but notably higher than the 17 days recorded in March 2022. Most homes (65%) sold within a month of being listed.

First-time buyers accounted for 28% of sales in March, a slight increase from February but down from 30% in March 2022. Cash sales represented 27% of transactions, while individual investors or second-home buyers purchased 17% of homes.

Distressed sales, including foreclosures and short sales, remained consistent at 1% of total sales, unchanged from the previous month and year.

Looking ahead, Yun anticipates a rebound in home sales despite fluctuations, citing a potential shift in the Federal Reserve’s monetary policy towards neutrality or loosening, alongside a steady decline in consumer price inflation and rental rates.

Freddie Mac reported a 30-year fixed-rate mortgage average of 6.27% as of April 13, slightly lower than the previous week but higher than the same period last year (5%).

Decline in Single-Family Home Sales, Steady Condo/Co-op Sales

In March, single-family home sales saw a decline, reaching a seasonally adjusted annual rate of 3.99 million, down 2.7% from February’s 4.10 million and a notable 21.1% decrease from the previous year. The median price for existing single-family homes in March stood at $380,000, reflecting a 1.4% drop compared to March 2022.

Meanwhile, existing condominium and co-op sales remained steady, maintaining a seasonally adjusted annual rate of 450,000 units in March, identical to February’s figures. However, sales were down by 28.6% compared to the previous year. The median price for existing condos was $337,300 in March, indicating a 2.1% annual increase.

Regional Variations in Existing-Home Sales

In the Northeast region, existing-home sales maintained stability, remaining unchanged from February with an annual rate of 520,000 in March. However, compared to March 2022, sales were down by 21.2%. The median price in the Northeast rose to $395,400, reflecting a 1.0% increase from the previous year.

Moving to the Midwest, existing-home sales experienced a decline of 5.5% from the previous month, reaching an annual rate of 1.03 million in March. This marked a significant 17.6% decrease compared to the same period last year. Despite the decline in sales, the median price in the Midwest rose to $273,400, showing a 1.7% increase from March 2022.

In the South, existing-home sales dipped by 1.0% in March compared to February, resulting in an annual rate of 2.07 million. Year-over-year, sales were down by 20.4%. However, the median price in the South saw a slight increase, reaching $347,600, up by 0.3% from one year ago.

Meanwhile, in the West, existing-home sales experienced a notable decrease of 3.5% from the previous month, amounting to an annual rate of 820,000 in March. Compared to the prior year, sales in the West were down by 30.5%. The median price in the region dropped to $565,400, reflecting a 7.5% decrease from March 2022.