December 5, 2023

U.S. Home Sales Top Forecasts in March

Sales of previously owned homes in the United States rose more than expected in March, a trade group said Wednesday, raising cautious optimism about the housing market.

The National Association of Realtors said sales rose 3.7 percent month over month to an annual rate of 5.10 million units after an upwardly revised pace of 4.92 million units in February.

Economists polled by Reuters had expected sales to rise 2.5 percent to a 5-million-unit pace from the previously reported 4.88-million-unit rate. Sales have now risen in six of the last eight months.

“It’s slow, steady progress, but you cannot not be disturbed by the slow pace of recovery,” said Pierre Ellis, an economist at Decision Economics in New York. “Demand is rising even with higher mortgage rates so that’s encouraging.”

The housing market is struggling to find its footing as a wave of foreclosed properties keeps supply elevated and prices depressed.

Last month, foreclosures and short sales, which typically occur at about 20 percent below market value, accounted for 40 percent of transactions. That was the highest since April 2009 and was up from 39 percent in February.

The median home price fell 5.9 percent in March from a year earlier, to $159,600. Compared with March last year, sales were down 6.3 percent.

“A sustained turnaround in the housing market is still far off based on earlier-released depressed readings for housing starts, building permits and builders’ confidence indices,” said Krishen Rangasamy, an economist at CIBC World Markets in Toronto.

A separate report on Wednesday showed demand for home loans rose last week, as interest rates eased and purchase activity picked up. The Mortgage Bankers Association said its purchase index rose 10 percent to 210.8, the highest since early December.

Last month, all-cash purchases made up a record 35 percent of sales in March and the NAR said the lower and upper ends of the market were showing strong activity, with the middle part remaining sluggish.

Sales last month rose across the board, with multifamily dwellings rising 1.6 percent and single-family home units advancing 4 percent.

At March’s sales pace, the supply of existing homes on the market slipped to 8.4 months’ worth, from 8.5 months in February. However, the number of previously owned homes on the market rose 1.5 percent, to 3.55 million.

A supply of six to seven months is generally considered ideal, with higher readings pointing to lower house prices.

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