Existing home sales in the U.S. increased to their highest level in 18 months in March fueled by inventory levels, according to an industry report Wednesday.
The National Association of Realtors said on Wednesday existing home sales increased 6.1 percent to an annual rate of 5.19 million units, the highest level since September 2013. The percent increase was the largest since December 2010.
“After a quiet start to the year, sales activity picked up greatly throughout the country in March,” NAR chief economist Lawrence Yun he said. “The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years.”
February’s sales pace was revised up to 4.89 million units from the previously reported 4.88 million units. Economists polled by Reuters had forecast home resales rising to only a 5.03 million-unit pace last month.
Housing inventory climbed 5.3 percent to 2.00 million existing homes on the housing market for sale, bringing it 2.0 percent higher than a year ago when it was at 1.96 million. Further, inventory is at a 4.6-month supply at the current sales pace, which is down from 4.7 months in February.
“The modest rise in housing supply at the end of the month despite the strong growth in sales is a welcoming sign,” adds Yun. “For sales to build upon their current pace, homeowners will increasingly need to be confident in their ability to sell their home while having enough time and choices to upgrade or downsize. More listings and new home construction are still needed to tame price growth and provide more opportunity for first-time buyers to enter the market.”
The fairly upbeat report will not be enough, however, to sway economists’ expectations on second quarter growth following a considerably weak first quarter. Considering the abysmal data on retail sales, housing starts and manufacturing, the report will be unlikely to convince the Federal Reserve to start raising interest rates in June.
Meanwhile, the housing market lobby urged lawmakers in the Senate to chip away at the president’s post-financial crisis financial reform bill.
“This legislation levels the playing field for brokerages with affiliated business agreements by eliminating the 3 percent cap on the calculations of fees and points in the Dodd-Frank Ability-to-Repay/Qualified Mortgage rule,” NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., said.
Regional Data: Source NAR
March existing-home sales in the Northeast increased 6.9 percent to an annual rate of 620,000, and are 1.6 percent above a year ago. The median price in the Northeast was $240,500, which is 1.6 percent below a year ago.
In the Midwest, existing-home sales jumped 10.1 percent to an annual rate of 1.20 million in March, and are now 12.1 percent above March 2014. The median price in the Midwest was $163,600, up 9.7 percent from a year ago.
Existing-home sales in the South climbed 3.8 percent to an annual rate of 2.19 million in March, and are now 11.7 percent above March 2014. The median price in the South was $187,900, up 9.3 percent from a year ago.
Existing-home sales in the West rose 6.3 percent to an annual rate of 1.18 million in March, and are now 11.3 percent above a year ago. The median price in the West was $305,000, which is 8.3 percent above March 2014.