While issues surrounding inventory shortage and affordability continue to blight U.S. real estate markets, you wouldn’t know it from recent sales activity, which saw an uptick in the month just gone.
New data from the National Association of Realtors shows that sales of existing homes, including single-family homes, condos, co-ops and townhomes, rose by 1.1 percent in March to a seasonally adjusted annual rate of 5.6 million properties. Despite those gains however, sales remain 1.2 percent down from the same period a year before.
“Robust gains last month in the Northeast and Midwest—a reversal from the weather-impacted declines seen in February—helped overall sales activity rise to its strongest pace since last November,” said Lawrence Yun, chief economist of the NAR. “The unwelcoming news is that while the healthy economy is generating sustained interest in buying a home this spring, sales are lagging year-ago levels because supply is woefully low, and home prices keep climbing above what some would-be buyers can afford.”
The NAR’s report allows us to dig into some of the key indicators about the state of U.S. real estate markets. For example, average home prices have risen by 5.8 percent compared to one year ago, with the cost of a median home now standing at $250.400. “Although the strong job market and recent tax cuts are boosting the incomes of many households, speedy price growth is squeezing overall affordability in several markets, especially those out West,” Yun said.
While affordability remains a concern, there was at least encouraging news with regard to inventory shortages. The report shows that the total housing inventory rose by 5.7 percent in the last month to 1.67 million homes for sale. At the current sales pace that puts unsold inventory at a 3.6 month supply, which is still a long way from the 6-month supply that’s considered to be healthy.
The low inventory means that those homes which are listed do not stay on the market for very long. Just over 50 percent of homes sold in March were listed for less than a month before a buyer was found. The average time on market was exactly 30 days, down from 34 days a year ago.
“Realtors throughout the country are seeing the seasonal ramp-up in buyer demand this spring, but without the commensurate increase in new listings coming onto the market,” Yun said. “As a result, competition is swift, and homes are going under contract in roughly a month, which is four days faster than last year and a remarkable 17 days faster than March 2016.”