Existing-home sales were basically stagnant in March, dropping 0.2% to a seasonally adjusted annual rate of 4.59 million – just slightly below the February rate of 4.60 million – according to the National Association of Realtors (NAR).
This was 7.5% below the 4.96 million-unit pace seen in March 2013, NAR reports.
What's more, it was the lowest since July 2012, when the annual pace was 4.59 million.
Lawrence Yun, chief economist for NAR, says the trend is troubling because ‘there really should be stronger levels of home sales given our population growth.’ However, he remains optimistic that the spring home shopping season is about to shift into gear.
‘With ongoing job creation and some weather-delayed shopping activity, home sales should pick up, especially if inventory continues to improve and mortgage interest rates rise only modestly,’ Yun says in a release.
According to NAR, the average price of a home in the U.S. in March was $198,500, up 7.9% from March 2013.
Distressed homes – foreclosures and short sales – accounted for 14% of March sales, down from 16% in February and 21% in March 2013.
‘With rising home equity, we expect distressed homes to decline to a single-digit market share later this year,’ Yun says. The report also mentions that home price appreciation was basically flat in March as well.
Foreclosure sales accounted for 10% of March existing-home sales, while short sales accounted for 4%.
Foreclosures sold for an average discount of 18% below market value in March, while short sales were discounted 12%.
Total inventory at the end of March rose about 4.7% to reach 1.99 million existing homes available for sale – a 5.2-month supply at the current sales pace. This is up from a five-month supply in February and a 4.7-month supply a year ago.
‘There are indications that the stringent mortgage underwriting standards are beginning to ease a bit, particularly regarding credit score requirements, but they remain a headwind for entry-level and single-income home buyers,’ Steve Brown, president for NAR, says.
‘We also have tight inventory in the lower price ranges where many starter homes are found, but rising new home construction means some owners will be trading up and more existing homes will be added to the inventory. Hopefully, this will create more opportunities for first-time buyers,’ Brown adds.
To read the full report, click here.