Existing Home Sales Fell Again as Prices Rise and Inventory Remains Very Low
Sales of existing homes decreased 2.7 percent in March, to a 5.77 million seasonally adjusted annual rate. Sales are down 4.5 percent from a year ago.
Sales in the market for existing single-family homes, which account for about 89 percent of total existing-home sales, also dropped 2.7 percent in March, coming in at a 5.13 million seasonally adjusted annual rate (see first chart). From a year ago, sales are down 3.8 percent. Single-family sales were at their slowest pace since June 2020.
The single-family segment saw sales decline in three of the four regions. Sales fell 4.1 percent in the Midwest, 3.5 percent in the Northeast, the smallest region by volume, and 2.9 percent in the South, the largest region by volume while sales were unchanged in the West. Measured from a year ago, sales are also down in all four regions (-12.7 percent in the Northeast, -4.5 percent in the West, -3.3 percent in the Midwest, and -1.3 percent in the South).
Condo and co-op sales fell 3.0 percent for the month, leaving sales at a 640,000 annual rate for the month versus 660,000 in February (see first chart). From a year ago, condo and co-op sales were off 9.9 percent and are at their slowest pace since August 2020. Condo and co-op sales were down in two regions in March, -14.3 percent in the Midwest and -3.3 percent in the South but unchanged in the Northeast and in the West. From a year ago, sales are off in three regions (-14.7 percent in the South, -7.7 percent in the Northeast, and -6.7 percent in the West) but unchanged in the Midwest.
Total inventory of existing homes for sale rose in March, increasing by 11.8 percent to 950,000, leaving the months’ supply (inventory times 12 divided by the annual selling rate) up 0.3 month at 2.0, the highest since November but still extremely low by historical comparison.
For the single-family segment, inventory was up 12.2 percent for the month at 830,000 (see second chart) but is 6.7 percent below the March 2021 level. The months’ supply was 1.9, up from 1.7 in the prior month (see third chart). The condo and co-op inventory increased 10.1 percent to 120,000 (see second chart), pushing the months’ supply up to 2.3 from 2.0 in February. Months’ supply is 17.9 percent below March 2021 (see third chart).
The median sale price in March of an existing home was $375,300, 15.0 percent above the year ago price. For single-family existing home sales in March, the price was $382,000, a 15.2 percent rise over the past year and a record high (see fourth and fifth charts). The median price for a condo/co-op was $322,000, 11.9 percent above March 2021 and also a record high (see the fourth and fifth charts).
Housing is likely to be volatile over the coming months as fundamentals adjust to changing market conditions. Increased opportunities for employees to work remotely are likely to impact demand while supply chain issues and labor difficulties impact supply. Furthermore, record-high prices and the recent surge in mortgage rates will likely push some buyers out of the market.
Robert Hughes
Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
