A harsh winter is never good news for the housing market, and this year was one for the books. But there are early indications that the spring buying season could provide an extra bit of relief this year.
After months of disappointing results, sales of existing homes in the US heated up 6.1 percent in March to a 5.19 million annualized pace, according to a report released Wednesday by the National Association of Realtors (NAR). That was a big increase from the 4.89 million pace recorded in February, and analysts had expected a smaller rise, to about a 5.03 million rate. The increase was the best monthly showing for existing home sales in 18 months.
Existing sales accelerated in all regions of the country. The Midwest had the largest jump, at 10.1 percent. The Northeast, West, and South saw increases of 6.9 percent, 6.3 percent, and 3.8 percent, respectively.
"After a quiet start to the year, sales activity picked up greatly throughout the country in March," NAR chief economist Laurence Yun said in the NAR’s report. "The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years."
The supply of available homes also picked up in March, by about 5.3 percent. There were 2 million preowned homes for sale at the end of the month. Because of the increased pace in sales, however, the months’ supply of homes edged down slightly, to 4.6.
Home prices continued their unabated climb. The median price for a preowned home in the US was $212,100, a 7.8 percent year-over-year increase. Prices have risen for 37 months in a row; March marked the largest year-over-year rise since February 2014. Prices have rebounded much faster than other aspects of the market, stoking concerns that, combined with relatively tight inventory, they are squeezing many potential buyers out of the market.
Still, there are continued (but small) signs that the housing market is shifting away from the all-cash and speculative buyers that propped up the early stages of the recovery in favor of more traditional buyers. “Mortgage applications for home purchase have shown some life in recent weeks,” MFR Inc. economist Joshua Shapiro writes in an e-mailed analysis. “Continued gains in mortgage applications … would suggest that marginal gains in sales are coming from more traditional buyers.”
The share of first-time home buyers ticked up 1 percent last month, from 29 percent to 30 percent. "First time homebuyers played an important part in lifting home sales," IHS Global Insight economists Patrick Newport and Stephanie Karol wrote in an e-mail, noting that purchasing by that group has grown 10 percent year-over-year. "Although it is too soon to hail this as a trend, it is a step in the right direction."
The share of all-cash purchases, meanwhile fell 2 percent. And the proportion of distressed purchases, like foreclosures, fell slightly, a sign that the market is getting healthier.
Despite all the good news, however, a robust spring season for the housing market isn’t necessarily a given. According to data released last week, the pace of housing starts, or construction on new homes, climbed less than expected during what is typically the busy season for builders.