The National Association of Realtors (NAR) released their Existing Home Sales report last week and it showed that closings on existing homes were down 2.7% in the month of March. This report likely included some of the move higher in rates, but not all because a lot of the rise in rates occurred recently. On a year-over-year basis, sales were down 4.5%, which is still quite strong considering higher rates, higher home prices, and current levels of tight inventory. In regards to inventory, it did increase by almost 12% from February to March by about 950,000 homes for sale. This is down about 10% from last year’s report. Also, according to NAR, there was about two months’ supply of homes, up from 1.7 months.
In regards to demand, homes that were available for sale were only on the market for 17 days in March, which was down from 18 days in February and 19 days in January. Another metric showed that 87% of homes that sold were on the market for less than one month. These strong levels of demand should continue to be supportive of home prices. Speaking of home prices, The Case Shiller reported a 19.2% annual gain for the month of January up from 18.9% in the previous month.
The Median home price was reported at $357,300, which is up 15% year over year. First-time home buyers have accounted for about 30% of sales, which is a move higher from 28% in NAR’S previous report. Also, to note, cash buyers jumped from 25% to 28% of purchases, while investors purchased 18% of homes. Foreclosures and short sales still only account for less than 1% of all transactions; this number is so low due to the fact of stronger lending guidelines and the copious amounts of appreciation as previously stated.
It is prevalent that homes are continuing on their appreciation ride in the face of rising interest rates, due to the current dynamic of low levels of inventory and very high levels of demand.