The National Association of Realtors (NAR) released their monthly Existing Home Sales Report this week which indicated a 3.7% decline of sales compared to February, marking the second straight month of declines. Regardless of this month-to-month decline, year-over-year sales were actually up by 12.3% compared to March of 2020. Something important to consider with that comparison, however, is that March of 2020 was the start of the market feeling severe pandemic effects and corresponding lockdowns, which brought transactions to a near standstill. Additionally, listings in March typically sold in only 18 days, which is a new record low.
Single-Family, Townhomes, Condo Sales Decrease 3.7%
Although buyer interest remains high, existing homes sales dropped by 3.7% compared to the previous month, resulting in a seasonally adjusted rate of 6.01 million sales in March 2021. Taken in tandem with the 6.6% decline seen in February, the winter season and new year’s uncharacteristically strong start is finally slowing. While a recovery has objectively been made following the steep drops seen in the early stages of the pandemic, declining sales can represent a variety of challenges in the market.
Specific asks of why this might be happening is chalked up to a variety of factors, though. Lawrence Yun, NAR’s Chief Economist, cites affordability as a general inhibitor for many buyers, pointing to increases in both prices and mortgage rates. Although mortgage rates are currently (as of mid-April) seeing a slight return to February’s numbers, March only saw rates increase by almost 20 base points.
Prices Continue to Rise
In addition to back-sliding sales, prices continue to rise across the country and unprecedented rates. The median existing-home sales price in March reached a new historic high of $329,100, or an increase of 17.2% compared to March of 2020 ($280,700). While appreciations in YOY are nothing new, the March numbers mark the eighth, and highest, straight month of double digit increases.
Double digit gains or not, last month was the 109th straight month of price increases. Limited inventory undoubtedly still continues to affect these price increases. Although March’s inventory actually increased by 3.9% compared to February, it is still 28.2% lower compared to the previous year.
While imperfect and different from past years, the spring market is slowly beginning to emerge. If inventory continues to increase, prices should hopefully begin to cool, forcing the market to balance a bit. Connect with your clients now to help them get pre-approved and best prepare for May, one of the market’s historically strongest months.