March homes sales dropped despite a surge in supply. Here’s why.

Sales
of
previously
owned
homes
dropped
4.3%
in
March
compared
with
February,
to
a
seasonally
adjusted
annualized
rate
of
4.19
million
units,
according
to
the
National
Association
of
Realtors.
Sales
were
3.7%
lower
than
in
March
2023.
This
came
after
a
big
jump
in
sales
in
February.

Rising
mortgage
rates
are
likely
the
cause
of
the
slowdown.

This
sales
count
is
based
on
closings
from
contracts
likely
signed
in
January
and
February.
Mortgage
rates
stayed
lower
in
January,
in
the
mid
6%
range
on
the
popular
30-year
fixed
loan.
They
then
shot
higher
in
February.

Regionally,
sales
fell
everywhere
except
in
the
Northeast,
where
they
rose
4.2%
month
to
month.
Sales
dropped
hardest
in
the
West,
down
8.2%.
Prices
are
highest
in
the
West.

“Though
rebounding
from
cyclical
lows,
home
sales
are
stuck
because
interest
rates
have
not
made
any
major
moves,”
said
Lawrence
Yun,
NAR’s
chief
economist,
in
a
release. “There
are
nearly
six
million
more
jobs
now
compared
to
pre-COVID
highs,
which
suggests
more
aspiring
home
buyers
exist
in
the
market.”

Inventory
did
improve
slightly,
rising
4.7%
month
to
month
to
1.11
million
homes
for
sale
at
the
end
of
March.
That’s
a
3.2-month
supply
at
the
current
sales
pace.
Inventory
is
now
14.4%
higher
than
March
of
last
year.

More
supply
did
not
cool
home
prices,
however.
The
median
price
of
an
existing
home
sold
in
March
was
$393,500,
up
4.8%
from
the
year
before.
It’s
also
the
highest
price
ever
for
the
month
of
March.
The
annual
comparison
was,
however,
slightly
lower
than
the
month
before.

The
spring
housing
market
is
getting
more
competitive,
and
moving
faster.
The
typical
home
sat
on
the
market
for
just
33
days
compared
with
38
days
in
February.

Investors
pulled
back
a
bit,
making
up
15%
of
sales,
compared
with
21%
in
February
and
17%
in
March
of
last
year.
First-time
buyers
did
make
a
comeback
though,
accounting
for
32%
of
sales,
up
from
26%
in
February
and
28%
the
year
before.

All-cash
purchases
accounted
for
28%
of
sales,
down
from
33%
in
February
but
up
from
27%
one
year
ago.
Pre-pandemic,
that
share
was
generally
around
20%.

Mortgage
rates
have
moved
even
higher
this
month,
with
the
average
rate
on
the
30-year
fixed
hovering
around
7.5%,
according
to
Mortgage
News
Daily.

“Every
time
you
get
to
that
round
number,
it
is
always
that
psychological
barrier,”
Yun
said.