The number of existing home sales increased again last March, which “continues what is a very uneven recovery,” according to a top economist from the National Association of Realtors last week.
Homes sales in March were up 3.7% on February’s total, the association revealed, totaling 5.1 million for the entire month, but this figure is still 6.3% lower than it was a year ago, in March 2010.
Meanwhile, earlier in the week the government released a report showing that new home constructions and new construction permits had also increased during the month.
Although this may seem like good news at a first glance, the truth is that it’s not that great. Even though sales have risen slightly, real estate is still struggling in the doldrums, with the demand for homes being far outweighed by the supply.
“It doesn’t even matter that buyers are able to snap up the deal of a lifetime right now, we are still swimming in a sea of foreclosed properties,” complains Douglas Porter of BMO Capital Markets when addressing investors last Wednesday.
The average price of a home meanwhile, has fallen by 5.9% from last year, to just $159,600.
What’s really holding things back is that many people who want to get in on the act and buy a home simply can’t get a mortgage. Nowadays, mortgage companies require a credit rating of 760 to grant a mortgage, which is up from the 720 in 2007.
“Despite the fact that home sales are rising without any kind of federal stimulus, it’s clear that if mortgage lenders were allowed to get back to the safe, normal standards they were operating under ten years ago, sales would be much stronger,” said the National Associate on Realtors’ economist Lawrence Yun.
Just 33% of homes were purchased by first time buyers last March, which was down from 44% one year ago. 22% of sales were on the account of investors, a rise from the 19% of March last year.
Cash only sales reached a record high level, hitting 35% of all sales.