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Monday, April 22, 2013

Limited Inventory of Homes for Sale Holds Back Home Prices

The spring home sale market is seeing 25% more buyers this year than last and that’s putting pressure on home prices, according to data collected by the NATIONAL ASSOCIATION OF REALTORS®.

Sales of existing single-family homes, townhomes, condominiums, and co-ops that are completed transactions declined 0.6% from February to March, but remain 10.3% higher than in March 2012.

Home sales have been above year-ago levels for 21 consecutive months, while prices show 13 consecutive months of year-over-year price increases.

There is more demand than supply in the current market, said NAR Chief Economist Lawrence Yun. “Buyer traffic is 25% above a year ago, when we were already seeing notable gains in shopping activity,” he said. “In the same timeframe, housing inventories have trended much lower, which is continuing to pressure home prices.”

The demand for home ownership has been fueled in part by low mortgage rates, which make home buying more affordable. However, mortgage underwriting standards remain excessively tight, making it harder for renters to qualify for home loans, Yun said.

If homes continue to sell at the current pace, it would take 4.7 months to sell the properties currently listed for sale. At this point last year, there was a 6.2-month supply of homes for sale.

“Conditions continue to broadly favor sellers,” Yun said. “We need a housing supply of over 6 months to have a generally balanced market between home buyers and sellers, but it’s unlikely we’ll get there without greater increases in housing construction.”

Median Home Price Rises in March

The national median existing-home price for all housing types was $184,300 in March, which is 11.8% higher than March 2012. The March increase is the strongest since November 2005, when home prices rose 12.9% from a year earlier.

Distressed homes — foreclosures and short sales — accounted for 21% of March sales, down from 25% in February and 29% in March 2012. Thirteen percent of March sales were foreclosures, and 8% were short sales.

Foreclosures sold for an average discount of 15% below market value in March, while short sales were discounted 13%.

“The typical home sold in March was on the market for one month less than it took to sell a year ago,” said NAR President Gary Thomas. “Multiple bidding is becoming more common, and more homes are selling above the asking price.”

The median time on market for all homes was 62 days in March, down from 74 days in February and is 32% below 91 days in March 2012.

Short sales were on the market for a median of 81 days, while foreclosures typically sold in 46 days, and non-distressed homes took 66 days. Thirty-seven percent of all homes sold in March were on the market for less than a month.

First-time buyers accounted for 30% of purchases in March, unchanged from February; they were 33% in March 2012.

All-cash sales were at 30% of transactions in March, down from 32% in February; they were 32% in March 2012. Individual investors, who account for most cash sales, purchased 19% of homes in March, down from 22% in February; they were 21% in March 2012.

Median Home Prices Rise

Single-family home sales slipped 0.2% in March, but are 9.1% above March 2012. The median existing single-family home price was $185,100 in March, up 12.1% from a year ago.

Existing condominium and co-op sales fell 3.2% in March, but are 20.0% higher than a year ago. The median existing condo price was $178,900 in March, which is 10.4% above March 2012.

Home Prices Up in All Regions

Regionally, existing-home sales in the Northeast were unchanged in March and are 6.8% above March 2012. The median price in the Northeast was $237,000, up 3.0% from a year ago.

Existing-home sales in the Midwest rose 1.8% in March and are 14.9% above a year ago. The median price in the Midwest was $141,800, up 7.8% from March 2012.

In the South, existing-home sales slipped 1.5% in March but are 12.7% above March 2012. The median price in the South was $161,700, which is 10.4% above a year ago.

Existing-home sales in the West declined 1.7% and are 4.4% above a year ago. With notably constrained inventory conditions, the median price in the West rose to $258,100, up 26.1% from March 2012.


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