Existing Home Sales Increase 3.7% In March
Existing-home sales rise in March, increasing 3.7% to an annual rate or 5.1 million in March. February’s home sales were revised upward to 4.92 million. March’s pace is still 6.3% less than March 2010’s annual rate; although, last year’s sales were in response to the home buyer tax credit that ended last summer, according to the National Association of Realtors (NAR).
Lawrence Yun, NAR chief economist, expects the improving sales pattern to continue. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain – primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”
Currently, the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is the lowest since 1970, at only 13% of gross household income. Mortgage rates are still low, falling to 4.84% in March. In comparison, March of last year had interest rates of 4.97%.
As Yun said, this is still a buyer’s market with low interest rates and increased employment. Also, rent prices are moving up, adding another advantage to owning a house. The only trouble is the credit restraints, with the average credit score needed to obtain a conventional mortgage rising to about 760 from nearly 720 in 2007.
“Given that FHA and VA government-backed loan programs turned a modest profit over to the U.S. Treasury last year, and have never required a taxpayer bailout, we believe low-down payment loans should continue to be available for those consumers who have demonstrated financial responsibility and are willing to stay well within their budget. Raising the down payment requirement would unnecessarily deny credit to many worthy middle-class families and veterans,” Yun said.
The median existing-home price for all housing types was $159,600 in March, down 5.9% from March 2010. Furthermore, distressed homes account for a 40% market share. There were 3.55 million existing homes for sale at the end of March, representing an 8.4 month supply at this pace.
First-time buyers purchased 33% of homes in March, down 1% since February. All-cash sales accounted for 35% in March (up from 33% in February) while investors accounted for 22% of sales (up from 19% in February). Repeat buyers were the remaining category. Single-family home sales increased 4.0% in March while existing condo and co-op sales increased 1.6%.
By region, the South saw the greatest increase in home sales, with an 8.2% increase. The Northeast had the second largest increase in sales with 3.9% while the Midwest sales increased 1.0%. The only region’s home sales to decline were the West which decreased 0.8%.