Sales of previously occupied US homes slowed down in March. This is a slow start to the spring home buying season as mortgage rates and prices hinder future home shoppers.
Existing home sales have fallen to a seasonally adjusted annual rate of 4.2 million units, a 4.9% year onwards from last February, the National Association of Realtors said Thursday. The decline in sales in March is the largest monthly decline since November 2022, down 6.7% from the previous month.
Sales fell 2.4% compared to last March. According to Factset, the latest home sales were not at the pace economist that the 42 million pace economist had hoped for.
According to NAR chief economist Lawrence Yun, the average cost of a US mortgage, which rose to its highest level in two months last week, is a key barrier to becoming a home buyer.
“The mobility of housing, which is currently historic low, shows the troublesome possibility of less economic mobility in society,” Yun said.
Home prices have increased annually for the 21st consecutive month, but have slowed down. The national median selling price rose 2.7% in March the previous year, rising to a record high of $403,700 in March, the lowest annual increase since August.
The U.S. housing market has been in a sales recession since 2022, when mortgage rates began to rise from lows during the pandemic era. Sales of previously occupied US homes fell to their lowest levels last year in nearly 30 years.
The rise in mortgage rates also weakened the start of the spring 2024 home buying season. After just over 7% this year in mid-January, the average 30-year mortgage rate has risen nearly to 6.83% last week, rising to its highest level in eight weeks.
Sales fell in March, even as more homes appeared on the market for spring shoppers towards the spring home-being season.
At the end of last month there were 1.33 million homes selling, a rise of 8.1% since February, Nar said.
This will lead to a four-month supply at the current sales pace, starting from a 3.2-month pace at the end of March last year. Traditionally, supply for 5-6 months was considered a balanced market between buyers and sellers.
“We felt that more inventory would lead to more sales, but that’s not the case,” Yun said.
