Photo: © Retrostar / Adobestock
Home prices are soaring to new heights. In March, the median existing-home sales price climbed year over year by 17.2%, creating a new record. Every sales region in the country posted price increases in the double digits. According to Lawrence Yun, chief economist for the National Association of Realtors (NAR), "Consumers are facing much higher home prices, rising mortgage rates, and falling affordability; however, buyers are still actively in the market." This fact is reflected in home sales figures. While existing-home sales dipped for the second month in a row, sales were up overall year over year. Yun believes that March's home sales could have been stronger had there been more inventory on the market. "Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising." That confidence might continue to increase over the coming year. While mortgage rates have risen, the overall rates are still favorable, and the country's economic outlook is encouraging. "At least half of the adult population has received a COVID-19 vaccination, according to reports," says Yun, "and recent housing starts and job creation data show encouraging dynamics of more supply and strong demand in the housing sector."
Housing Inventory at Record Lows
At the end of March, there were 1.07 million units available for sale, up a slight 3.9% from a month earlier but down a staggering 28.2% from a year earlier. At the current sales pace, the housing stock would supply the market for 2.1 months, up from a two-month supply in February but a decline from the 3.3-month supply recorded in March 2020. Since NAR began tracking the single-family home supply in 1982, inventory levels have rarely dropped so low. According to Yun, "Without an increase in supply, the society wealth division will widen with homeowners enjoying sizable equity gains while renters will struggle to become homeowners."
Time on Market
As a result of this lack of inventory, homes sold quickly in March. Of all the homes sold in March, 83% were under offer in less than 30 days. The average property remained available for sale for just 18 days, down from 20 days a month ago and 29 days a year ago.
Who's Buying?
Undeterred by the lack of supply, first-time buyers still managed to gain a foothold in the housing market; this group accounted for 32% of all purchases in March. Individual investors and second-home buyers—a group that typically accounts for most all-cash sales—made up 15% of all buyers. Twenty-three percent of all sales in March were all-cash transactions.
Regional Sales Breakdown
Northeast - Existing-home sales annual rate of 760,000; a decrease of 1.3% from February 2021, but an increase of 16.9% from March 2020. At $364,800, the median sales price increased 21.4% from March 2020.
Midwest - Existing-home sales annual rate of 1.28 million; a decrease of 2.3% from February 2021, but an increase of 0.8% from March 2020. At $248,200, the median sales price increased 13.5% from March 2020.
South - Existing-home sales annual rate of 2.7 million; a decrease of 2.9% from February 2021, but an increase of 15.9% from March 2020. At $283,900, the median sales price increased 15.6% from March 2020.
West - Existing-home sales annual rate of 1.27 million; a decrease of 8% from February 2021, but a increase of 15.5% from March 2020. At $493,300, the median sales price increased 16.8% from March 2020.
