U.S. Home Sales Soft in March 2014

Although home prices rose, existing-home sales were slow in March by historical standards.

U.S. existing-home sales were flat in March as sales gains in the Northeast and Midwest were offset by declines in the West and South. The median existing-home price reached $198,500, up 7.9% from March 2013, according to the NATIONAL ASSOCIATION OF REALTORS®.

NAR measures sales and prices of existing single-family homes for the nation overall, including condos, co-ops, and single-family homes. Last month, sales volume slipped 0.2%, dropping to the slowest pace seen since July 2012.

First-time homebuyers are stuck in a rut. They accounted for 30% of purchases in March, up from 28% in February; they were also 30% of sales in March 2013.

“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 homebuyers,” said NAR President Steve Brown.

“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 said.

By historical standards, current sales activity is underperforming, said NAR Chief Economist Lawrence Yun. “There really should be stronger levels of home sales given our population growth,” he said. “In contrast, price growth is rising faster than historical norms because of inventory shortages.”

Yun expects some improvement in the months ahead. “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,” he said.

Home Prices Rise

The 7.9% increase in the median existing-home price was fueled in part by a drop in distressed, discounted home sales. Distressed homes — foreclosures and short sales — accounted for 14% of March sales, down from 16% in February and 21% in March 2013.

Ten percent of March sales were foreclosures, and 4% were short sales. Foreclosures sold for an average discount of 18% below market value in March, while short sales were discounted 12%.

“With rising home equity, we expect distressed homes to decline to a single-digit market share later this year,” Yun said.

Real Estate Market Balance

Nationally, there’s a 5.2-month supply of homes for sale, up from a 5-month supply in February. That’s up 3.1% from a year ago, when there was a 4.7-month supply in March.

Thirty-seven percent of homes sold in March were on the market for less than a month. Other findings from the March data include:

  • Median time on market for all homes: 55 days in March, down from 62 days in February, and also 62 days on market in March 2013.
  • Median time on market for short sales: 112 days in March, while foreclosures typically sold in 55 days and non-distressed homes took 53 days.
  • All-cash sales: 33% of transactions
  • Investor purchases: 17% of transactions
  • Single-family home sales: down 7.3% from a year ago
  • Condominium and co-op sales: down 1.8% from February 2014
  • Median existing-condo price: $200,800, up 11.6% over past year

Regional Existing-Home Prices

 Median Price March 2014Median Price Change from March 2013March 2014 Existing-Home Sales
Northeast$244,700Up 3.2%Up 9.1%
Midwest$149,600Up 5.9%Up 4.0%
South$173,000Up 6.7%Down 3.0%
West$289,300Up 12.6%Down 3.7%