The median price of a previously owned home sold in the U.S. jumped to a record high in March even as the number of homes sold continued to fall, data from the National Association of Realtors showed Wednesday.
Sales of existing homes fell to a seasonally-adjusted, annual rate of 5.77 million, below the forecast of 5.93 million. The February figure was revised down from 6.020 million to 5.93 million. Compared with a year ago, home sales are down 4.5 percent following a revised 3.9 percent annual decline in February.
Falling sales, however, have not dented home prices. Quite the opposite. The median price of a home rose to $375,300, the highest ever recorded by the National Association of Realtors. Compared with the prior month, the median price was up 4.5 percent. From a year ago, the median price is up 15 percent. Prices were up in all four major regions of the country.
“The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power,” said Lawrence Yun, NAR’s chief economist. “Still, homes are selling rapidly, and home price gains remain in the double-digits.”
The sales figures are based on closings, indicating that contracts were likely signed a month or two earlier. In January and February, interest rates had not yet soared as much as they have in March and April. The average rate on the 30-year fixed mortgage stood at 3.29 percent at the year’s start. It was up to 3.9 percent by the end of February and 4.65 percent as March concluded. It now stands at 5.35 percent.
With mortgage rates expected to rise further, Yun predicts home sales will fall by 10 percent this year, for home prices to slow to around a five percent gain.
The median price is somewhat distorted by the fact that rising prices and lower affordability have squeezed the less expensive end of the market while pricier homes are still selling.
Sales of homes priced between $100,000 and $250,000 are 21 percent below their year-ago levels. Homes prices between $750,000 and $1 million are selling at a rate 30 percent above last year’s rate. Sales of homes over $1 million have seen a 25 percent rise.
“Home prices have consistently moved upward as supply remains tight,” Yun said. “However, sellers should not expect the easy-profit gains and should look for multiple offers to fade as demand continues to subside.”
For now, though, homes are selling quickly. Properties typically remained on the market for 17 days in March, down from 18 days in February and 18 days in March 2021. Eighty-seven percent of homes sold in March 2022 were on the market for less than a month.
First-time buyers were responsible for 30 percent of sales in March, up from 29 percent in February and down from 32 percent in March 2021. It’s possible a last-minute rush to lock in rates encouraged some buying by first-timers.
A survey of U.S. households by the Federal Reserve Bank of New York released this week showed that for the first time in at least a decade, fewer than half of renters expect to eventually own a home. That’s a clear reflection of how deeply the rise in prices has damaged the perceived affordability of homes.
At the end of March, there were 950,00 homes for sale, an increase of 11.5 percent compared with February but down 9.5 percent compared with a year ago. At the current sales pace that represents a two-month supply, up from the 1.7 month supply in February.