Rosalind Evans
Despite increased available homes, sales of previously owned homes declined in March. The National Association of Realtors (NAR) reported a 4.3% drop from February, marking a seasonally adjusted annualized rate of 4.19 million units. This decrease also represents a 3.7% fall compared to March last year, underscoring a continued struggle in the housing market despite previous gains in February and a significant increase in job availability.
As noted by industry experts, the slow sales in March can largely be attributed to rising mortgage rates. In January, rates for the popular 30-year fixed mortgage hovered in the mid-6% range but sharply increased in February, impacting contracts that closed in March. Lawrence Yun, the NAR’s chief economist, highlighted the role of fluctuating interest rates in the current market dynamics, stating, “Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves.”
Regionally, the Northeast was the exception to the downward trend, with a 4.2% rise in sales from the previous month. In contrast, the West saw the most significant decline, with an 8.2% drop in sales and maintaining the highest home prices in the country.
Despite the increased inventory, which rose 4.7% from the previous month to 1.11 million homes available, prices did not stabilize. The median price for an existing home reached a record high for March at $393,500, up 4.8% from last year. This supply increase was insufficient to meet or cool the market demand, as indicated by the 3.2-month supply at the current sales pace.
The market dynamics also showed variations in buyer composition. Investors, who previously made up a larger share of home purchases, reduced their activity to only 15% of sales, down from 21% in February. Conversely, first-time buyers were more active, representing 32% of the total sales, a noticeable increase from previous months.
“All-cash purchases accounted for 28% of sales, slightly lower than February’s figures but still above pre-pandemic levels, reflecting a shift in how transactions are being financed,” Yun added, discussing the market’s complexities.
The housing market continues to navigate significant challenges and shifts, influenced heavily by fluctuating interest rates and changing buyer demographics. As mortgage rates climb even higher, reaching around 7.5% this month, the market faces a psychological barrier that may further influence buyer decisions and market fluidity. Moving forward, stakeholders in the real estate market will need to closely monitor these trends and adjust strategies accordingly to accommodate the evolving landscape of home buying and selling.
