Prices Soar as Low Inventory Weighs on Existing Home Sales

Family sitting outside on the steps of their home.
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The median price of existing homes sold in the U.S. hit a record high in March even while sales volumes fell below expectations.

Previously owned homes sold at a seasonally adjusted, annualized rate of 6.01 million, missing expectations for sales of 6.11 million, the National Association of Realtors said Thursday This was a 6.6 percent decline from February and the second straight month of falling sales.

Single-family home sales decreased to a seasonally-adjusted annual rate of 5.30 million in March, down 4.3 percent from 5.54 million in February.

Sales are down because the number of homes on the market is extremely low, prices have been climbing, and mortgage rates have moved up from ultra-low levels. Inventory was down 28.2 percent year-over-year in March compared to March 2020 but ticked up a few notches from February’s 1.03 million to 1.07 million.

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

The median existing-home price for all housing types in March was $329,100, up 17.2 percent from March 2020 ($280,700), as prices increased in every region. This was the highest ever median home price and highest ever annual rise, although these figures are somewhat distorted because so many of the sales in the month were of high-priced homes. Sales of homes priced over $1 million were up 108 percent year over year, while sales of homes priced under $200,000 were down 10 percent.

The median existing single-family home price was $334,500 in March, up 18.4 percent from March 2020. That was also a record high median price and record high annual gain.

Homes put up for sale are being snatched up quickly. Homes typically remained on the market for just 18 days in March, down from 20 days in February and from 29 days in March 2020. Eighty-three percent of the homes sold in March 2021 were on the market for less than a month.

“Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising,” Yun said.

Compared with a year ago, home sales are up 12.3 percent. But the year-ago period includes the initial phase of lockdowns, which depressed home sales because many realtors were unable to show homes, would-be sellers were reluctant to allow outsiders to visit, and would-be buyers were instructed to avoid leaving their own homes unnecessarily.

Single-family home sales were up 10.4 percent from one year ago.

February was revised up from 6.22 million to 6.24 million.

 

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