Economists Respond to March’s Fall in Existing Home Sales

The National Association of Realtors (NAR) reported Thursday that existing home sales decreased 2.6 percent, in March, to a seasonally adjusted annual rate of 4.48 million units, falling short of the 4.62 million economists had forecast. In response to this data, economists representing different institutions provided their insight to explain what the recent numbers might indicate.

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*Patrick Newport, U.S. economist, IHS Global Insight*

""Existing home sales declined in March mainly because fewer investors bought homes. Sales to those looking for a home to live in have been flat (and weak) for the past six months, despite low borrowing rates, low home prices and rising rents. A critical

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question is whether sales are set to take off soon, given the improving economy. Our view is that sales will improve during the course of this year, but unless credit conditions loosen significantly, a takeoff will not take place.""

_NAR reported investors bought 21 percent of the homes sold in March, down from 23 percent in February._

*Paul Diggle, property economist, Capital Economics*

""March's decline in existing home sales probably reflects the normal month by month volatility rather than renewed underlying weakness. The increase in households' confidence in the outlook for the housing market, coupled with a gradual improvement in the pace of the economic recovery, should drive a rise in home sales later this year….It is possible that the pattern within the quarter has been driven by the weather, with falls in the most recent two months reflecting a degree of payback after January's gain.""

*Mark Vitner, senior economist and Anika R. Khan, economist, Wells Fargo*

""Existing home sales dropped 2.6 percent, but are up 5.2 percent from a year ago. While existing sales are down for the second consecutive month, we are likely continuing to see payback from increases earlier this year. That said, we could see one more month of disappointing data, but we still contend the recent declines are not indicative of the trend. Stabilization will become more apparent once we return to normal weather.""