Historically Tight Inventory Causes Home Sales To Drop in March

• April 22nd 2013

by Shilpi Paul

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Existing home sales dropped in March largely as the result of tight inventory, reported the National Association of Realtors on Monday morning.

Between February and March, home sales declined 0.6 percent, to a rate of 4.92 million. Active for-sale inventory is at 1.93 million, which is 16.8 percent lower than it was one year ago.

From Lawrence Yun, NAR’s chief economist:

“Buyer traffic is 25 percent above a year ago when we were already seeing notable gains in shopping activity. In the same timeframe, housing inventories have trended much lower, which is continuing to pressure home prices. The good news is home construction is rising and low mortgage rates are continuing to keep affordability conditions at historically favorable levels. The bad news is that underwriting standards remain excessively tight, while renters are getting squeezed by higher rents.”

Here are a few other interesting tidbits from today’s report:

• Home sales have been above year-ago levels for 21 consecutive months, while prices have shown year-over-year price increases for 13 consecutive months.
• Sales of homes priced over $500,000 rose 25 percent, year-over-year.
• If you take out distressed sales, home sales increased 25 percent annually, and 5 percent month-over-month.
• The median home price has increased to $184,300, rising 11.8 percent since last year. This is the strongest year-over-year increase since November 2005.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/existing_home_sales_drop_in_march/6962.