Home prices have dropped yet again in the U.S. at the end of last month.
Due to rising mortgage rates and a shortage of fresh listings, sales of already-constructed homes fell 2.4% in the United States in March.
The National Association of Realtors said on Thursday that the number of previously owned homes sold annually in the U.S. fell to 4.44 million in March.
If purchases occurred at the same rate each month as they did in March, then that many homes would be sold in a year. The figures are subject to seasonal variations.
Using the months-supply measure, the number of homes for sale in March was the same as the month before: 2.6 months. Before the plague, people usually had enough supplies for four or five months.
In March, homes were on the market for an average of 29 days. In February, they were on the market for 34 days.
Most places saw a drop in sales of already-built homes, but the Midwest saw the most significant drop. The Northeast was the only place where sales stayed the same.
About 27% of all sales were made with cash, and about 28% of homes were sold to first-time buyers. Individual owners or people who bought a second home made up 17%.
Buyers are keeping an eye on mortgage rates, and because there aren’t many homes on the market, they’re being careful and stepping back when the market doesn’t go their way.
This week, rates went up, meaning potential borrowers will have to pay hundreds of dollars more. This is making fewer people want to get a mortgage. The drop is likely a sign that home sales will get worse.
A low number of new listings is another problem for people who want to buy a home. People are looking for new homes, of which there are more and more. Because of this, builders are getting more of the market.
“It’s a unique housing market,” said Lawrence Yun, head economist at the National Association of Realtors.
Yun said that even though home prices and sales have gone down, multiple offers are back, especially for starter houses. The number of new ads is 17% less than it was a year ago.
So, he said, it’s hard to tell if the market is hot or cold.
“There are reasons to remain pessimistic about the outlook for the housing sector,” Thomas Simons, a U.S. economist at Jefferies, wrote in a note. “Prices and interest rates still make it hard to buy, credit standards are getting tighter, and the supply on the market is still very low.”
The realities of the market after home prices fell
Another bad thing for sellers is that fewer people put their homes on the market for sale for the 39th straight week, which ended on April 1.
“There aren’t as many new homes for sale as there used to be,” Speianu explains why home sales are still at historically low levels.
Even though the number of real estate listings is 53% higher than it was a year ago, many of these homes have already been picked and passed over. On average, items stayed on the market 18 days longer than they did at this time last year. This is a sign that buyers prefer to choose from something other than what they have to choose from. In fact, homes have been sitting empty for 35 weeks in a row longer.
But this slow pace might pick up if more people who want to buy a home go to open houses as the weather gets warmer and mortgage rates go down.
Speianu says, “It’s likely that the amount of time a home is on the market will keep going down this spring as we get closer to mid-April, which is always the best time to sell a home.” “However, sellers must change their pricing and expectations to fit the current market.”
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“Buyer demand tends to be sensitive to changes in mortgage rates,” says Hannah Jones, an economist and research expert at Realtor.com. “When mortgage rates go down, buyer demand goes up.” “The recent drop in mortgage rates should have a similar effect on the housing market.”
On the other hand, Jones says, “Despite these increases in demand, the housing market is still too expensive for many people who want to buy.”
Reference:
U.S. Existing-Home Prices Fall Nearly 1% in March, the Biggest Drop in a Decade
