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First Cut: Existing home sales fall in March after February rebound

The NAR reported sales of existing homes fell 4.9% in March to 5.21 million units (SAAR) from 5.48 million in February (previously 5.51 million) when sales rebounded after softer levels in December and January. The March level puts the sales pace back on a path of moderate activity for the housing market.

Fewer homebuyers were in the market in the final months of 2018 as mortgage interest rates climbed near the 5.0%-mark. However, mortgage rates have dipped significantly starting in January. Some pent-up demand got exercised in February as consumers moved to take advantage of lower rates while prices were rising less quickly and there was more power to negotiate a contract. Since then rates have declined further and leveled off a bit about 4.0%. This should encourage consumers during the spring buying season. Nonetheless, the peak sales activity of 2017 and 2018 may not be reached again for a while. In March, sales were down 5.4% compared to a year-ago.

Sales of single-family units were down 4.9% in March from February and off 4.7% compared to March 2018. The single-family home market has proven less volatile than that for multi-units condos and co-ops. Sales were down 5.3% for multi-units month-over-month and declined 11.5% compared to the same month last year.

Some of the slower sales activity could be in part due to scant supplies of the more sought-after units. The months’ supply of homes on the market was 3.9 in March, up from the 12-month low of 3.6 in February. If consumers cannot find existing units, they may turn to new construction.

The median price of an existing home was up 3.7% in March from February, quite similar to the up 3.8% year-over-year. Price increases have lost momentum over the past two years. Still, home values remain on the rise.

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