The U.S. housing sector had another modestly positive showing in March as existing home sales, rose 6.8% to a 5.35 million unit annualized rate, boosted by the extended home buyer tax credit, the National Association of Realtors announced Thursday.
On a year-over-year basis, existing home sales are up 16.1% from the 4.61-million-unit rate recorded a year ago in March 2009. However, given that the housing market is recovering after a deep recession when home sales dropped off dramatically, large year-over-year percentage gains are easier to achieve.
Economists surveyed by Bloomberg News had expected March existing home sales to rise to a 5.25-million unit annualized rate from a 5.02-million-unit annualized rate in February.
Meanwhile, inventories of existing homes fell in March fell to an 8.0-month supply, down from an 8.5-month supply in February. What's more, inventories are down 1.8% from a year ago. Economists say a healthy, normal existing home sale market has a 3- to 5-month supply of homes available for sale.
Tax Credits Have Been a Success
Lawrence Yun, NAR chief economist, said March's existing home sales data underscores two key trends.
"Sales have been above year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running," Yun said, in a statement. "The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices. This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure."
Potential home buyers should keep in mind that the federal government's renewed and expanded tax credit program provides $8,000 for first-time buyers and $6,500 for repeat home buyers. Purchasers have until April 30 to take advantage of the credits.
The U.S. median home price for all types of housing was $170,700 in March, which represents a 0.4% increase compared to March 2009; the median existing single-family home price was $170,700, up 0.6% from March 2009. The median existing condominium price was $170,600, an 0.7% dip from March 2009.
Economists and market analysts closely-follow the monthly existing home sales statistic because previously-owned homes account for the bulk of U.S. home sales. Moreover, the sector does not operate in a vacuum. When buying a home, people tend to buy durable goods and big-ticket items as well -- furniture, appliances, landscaping equipment, home care supplies, etc. -- and uptrends in those sectors are good news for the economy and bullish indicators for U.S. stock markets.
By region, in March existing home sales rose 6% in the Northeast, where the median price rose 8.9% compared to a year ago to $249,800; sales rose 7.2% in the Midwest, where the median price rose 0.2% to $139,300; in the South, sales increased 7.1%, with the median price rising 5.2% to $154,800; in the West, sales increased 6.6%, with the median price plunging 7.9% to $209,400.
In general, the March existing home sales report offered a decent start to the spring season -- a period when many homeowners list their properties hoping to take advantage of the summer buying season. Provided the trend continues upward in the months and quarters ahead, that would support the narrative that the housing market is continuing to stabilize.
Existing Home Sales Rise 6.8% in March