The spring season is clearly a busy one: Existing-home sales climbed in March to their highest level in 18 months, sending the price of a home up 9% over a year earlier, according to a report today from the National Association of Realtors®.
Existing-home sales rose from 4.89 million in February to 5.19 million in March, a 6% increase across the country, driving prices higher. In the Midwest, prices rose nearly 10% from a year ago. In the South, prices climbed more than 9%; in the West they rose 8%. That may be good news for homeowners, but less so for buyers.
“There’s no question that affordability is declining in tandem with prices rising,” said Jonathan Smoke, chief economist for realtor.com®. “That said, we see more than half of inventory nationally affordable for median-income households, so there is affordable inventory.”
According to the NAR, inventory climbed about 5% to 2 million existing homes available for sale. While that’s up 2% from last year, it’s still just a 4.6-month supply of houses at the current sales pace. A six-month supply is considered a healthy market.
About 40% of the homes sold in March were on the market for less than a month, according to NAR.
All-cash sales were down, according to the report, while the share of first-time buyers was up slightly. Condo sales showed the biggest improvement, with an 11% increase in sales, while single-family home sales rose 5.5%.
The Midwest led the nation with a 10% monthly sales increase. Monthly sales rose just under 4% in the South and 6% in the West.
Smoke expects sales activity to continue rising, because in most parts of the country it’s still cheaper to buy a house than it is to rent an apartment. With mortgage interest rates still hovering around 4%, affordability is not a factor; however, the market is expecting interest rates to rise this summer. “When that happens, it will be a double-whammy,” said Smoke as home prices and interest rate hikes will combine to make homes less affordable.
To buyers searching for and not finding a home in this tight inventory environment, Smoke says, be patient but also be prepared to act. “Tight supply situation often leads to multiple offers on high-demand homes, so get pre-approved for a mortgage and be ready to put an offer as soon as you find that dream home.”
Published by Chrystal Caruthers on realtor.com.