Sales of Used Homes Dipped in March

The National Association of Realtors said Monday that sales fell 0.6 percent to a seasonally adjusted annual rate of 4.92 million, from 4.95 million in February. The February figure was revised lower.

Still, sales in March were 10.3 percent higher than a year earlier.

Sales have remained mostly unchanged in the last four months — largely, analysts have said, because of a limited supply of homes. Economists still predict the housing market will continue to recover this year.

The low supply, combined with rising demand for housing, could accelerate construction in coming months. The Realtors’ group said buyer traffic was 25 percent higher than a year ago.

“A disappointing result for U.S. existing-home sales, but with inventories still very tight, the outlook remains favorable,” Jennifer H. Lee, an economist at BMO Capital Markets, said in a note to clients.

A steady housing recovery is providing support to the economy this year. Builders are starting work on more homes, increasing construction jobs. And home prices are rising. Higher prices tend to make homeowners feel wealthier and encourage more spending.

But the pace of purchases of used homes has been little changed in recent months, partly because of the tight inventory. The supply of available homes has fallen nearly 17 percent in the last year to 1.93 million.

At the current sales pace, that supply would be exhausted in 4.7 months, less than the six months typical in a healthy market.

The supply rose 1.6 percent from February to March. The Realtors’ group says it expects a much bigger increase in supply this month as the spring selling season began.

The tight supply helps explain rising prices. The median price rose 11.8 percent from February to March to $184,300, the biggest one-month gain since 2005.

The higher median price partly reflects bigger increases in sales of more expensive homes. Sales of homes priced from $500,000 to $750,000 jumped 25.3 percent from a year earlier. By contrast, sales of homes priced from $100,000 to $250,000 rose just 7.1 percent.

First-time buyers, who usually drive housing recoveries, are playing a smaller role in the current rebound. They accounted for 30 percent of sales last month, the same as in February. First-time buyers usually make up about 40 percent of buyers in a healthy market.

One bright sign in the report is that the percentage of so-called distressed sales fell sharply. Distressed sales include foreclosed homes and homes in which the size of the mortgage exceeds the value of the home.

Those sales fell to 21 percent of the total in March, down from 25 percent in February. That is the lowest proportion since the Realtors’ group began tracking the figure in October 2008.

Steady hiring and near-record-low mortgage rates have helped increase sales.

Since the housing bubble burst more than six years ago, banks have imposed tighter credit conditions and required larger down payments. Those changes have left many would-be buyers unable to qualify for very low mortgage rates.

Mortgage rates dropped last week to near-record lows. The average rate for a 30-year fixed mortgage dropped to 3.41 percent from 3.43 percent. That is not far from the record low of 3.31 percent last November.

Article source: http://www.nytimes.com/2013/04/23/business/economy/sales-of-used-homes-dipped-in-march.html?partner=rss&emc=rss