As affordability constraints and lack of inventory remains a struggle for many potential homebuyers, existing-home sales edged lower in March, according to the National Association of Realtors. New data revealed month-over-month sales declined in three out of four major U.S. regions, while sales in the Northeast remained steady. Research showed all regions posted year-over-year decreases.
Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – fell 2.4% from February to a seasonally adjusted annual rate of 4.44 million in March. Year-over-year, sales waned 22.0% – down from 5.69 million in March 2022.
“Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” said NAR Chief Economist Lawrence Yun. “Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand. It’s a unique housing market.”
Total housing inventory registered at the end of March was 980,000 units, up 1.0% from February and 5.4% from one year ago (930,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, unchanged from February but up from 2.0 months in March 2022.
“Home prices continue to rise in regions where jobs are being added and housing is relatively affordable,” Yun noted. “However, the more expensive areas of the country are adjusting to lower prices.”
The median existing-home price for all housing types in March was $375,700, a decline of 0.9% from March 2022 ($379,300). Price climbed slightly in three regions but dropped in the West. Properties typically remained on the market for 29 days in March, down from 34 days in February but up from 17 days in March 2022. Some 65% of homes sold in March were on the market for less than a month.
"Affordability is not only an issue for first-time homebuyers, but also for many repeat buyers who still need to take on a mortgage," said Danielle Hale, chief economist for Realtor.com. "A recent survey showed that 82% of potential sellers needing to sell and buy felt “locked in” by their existing low mortgage rate. This suggests that both existing home supply and demand will be sensitive to mortgage rate changes."
First-time homebuyers were responsible for 28% of sales in March, up from 27% in February but down from 30% in March 2022. NAR’s 2022 Profile of Home Buyers and Sellers – released in November 2022 – found that the annual share of first-time homebuyers was 26%, the lowest since NAR began tracking the data.
"Sales of existing homes slipped 2.4% in March as the battle between affordability and aspirations continues. Mortgage rates climbed in February, when many of the homes sold in March would have gone under contract," said Hale. "The home sales pace lagged the March 2022 pace by a significant 22.0%. However, despite slowing for the month, the 4.44 million pace of home sales remains convincingly above the recent 4 million sales low reached in January, just 2 months after mortgage rates registered above 7%.
All-cash sales accounted for 27% of transactions in March, down from 28% in February and one year ago. Individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in March, down from 18% in February and the previous year.
Distressed sales – foreclosures and short sales – represented 1% of sales in March, nearly identical to last month and one year ago.
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.27% as of April 13. That’s down from 6.28% from the previous week but up from 5% one year ago.
“With overall consumer price inflation calming and rents expected to decelerate from robust apartment construction, the Federal Reserve’s monetary policy will surely shift from tightening to neutral to possibly loosening over the next 12 months,” Yun added. “Therefore, home sales will steadily rebound despite several months of fluctuations.”
Single-family and Condo/Co-op Sales
Single-family home sales faded to a seasonally adjusted annual rate of 3.99 million in March, down 2.7% from 4.10 million in February and 21.1% from one year ago. The median existing single-family home price was $380,000 in March, down 1.4% from March 2022. Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 450,000 units in March, identical to February but down 28.6% from the previous year. The median existing condo price was $337,300 in March, an annual increase of 2.1%.
“As documented in NAR’s recent report about housing wealth gains by homeowners over the last decade, homeownership offers a road to financial security and wealth development,” said NAR President Kenny Parcell, a Realtor from Spanish Fork, Utah, and broker-owner of Equity Real Estate Utah. “Rely on a Realtor to provide sound advice while purchasing your first home or next home.”
Existing-home sales in the Northeast were unchanged from February at an annual rate of 520,000 in March, but down 21.2% from March 2022. The median price in the Northeast was $395,400, up 1.0% from one year ago. In the Midwest, existing-home sales retracted 5.5% from one month ago to an annual rate of 1.03 million in March, falling 17.6% from the previous year. The median price in the Midwest was $273,400, up 1.7% from March 2022.
"Highlighting the impact of budget-challenges and local economic trends, the more affordable Northeast (+1.0%), Midwest (+1.7%), and South (+0.3%) saw price growth relative to one year ago while prices in the West declined (-7.5%)," said Hale. "Sales activity also saw smaller declines in these affordable regions relative to one year ago, but the Midwest had the weakest month-to-month sales trend.”
Existing-home sales in the South receded 1.0% in March from February to an annual rate of 2.07 million, a 20.4% decrease from the prior year. The median price in the South was $347,600, an increase of 0.3% from one year ago. In the West, existing-home sales declined 3.5% from the previous month to an annual rate of 820,000 in March, down 30.5% from the prior year. The median price in the West was $565,400, down 7.5% from March 2022.
To read the full report, including more data, charts and methodology, click here.