NAR: Existing-Home Sales Decreased to 5.77 million SAAR in March

Inventory down 9.5% year-over-year

From the NAR: Existing-Home Sales Slip 2.7% in March

Existing-home sales decreased in March, marking two consecutive months of declines, according to the National Association of Realtors®. Month-over-month, sales in March waned in three of the four major U.S. regions while holding steady in the West. Sales were down across each region year-over-year.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 2.7% from February to a seasonally adjusted annual rate of 5.77 million in March. Year-over-year, sales fell 4.5% (6.04 million in March 2021).
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Total housing inventory at the end of March totaled 950,000 units, up 11.8% from February and down 9.5% from one year ago (1.05 million). Unsold inventory sits at a 2.0-month supply at the present sales pace, up from 1.7 months in February and down from 2.1 months in March 2021.
emphasis added

The sales rate was slightly below the consensus forecast.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in March (5.77 million SAAR) were down 2.7% from the previous month and were 4.5% below the March 2021 sales rate. Note: Sales for February 2022 were revised down from 6.02 million to 5.93 million.

Sales Year-over-Year and Not Seasonally Adjusted (NSA)

The second graph shows existing home sales by month for 2021 and 2022.

Sales declined 4.5% year-over-year compared to March 2021. This was the eighth consecutive month with sales down year-over-year.

The third graph shows existing home sales for each month, Not Seasonally Adjusted (NSA), for a few selected years. The Orange line is for 2005 (record sales), and the black lines are for record low years (2008 and 2010). The dashed red line is for 2020 (Sales were distorted by the pandemic and boomed late in the year).

This also shows that January and February are usually the lowest sales months of the year NSA, and sales typically pick up in March of each year.

Sales NSA in March (456,000) were 5.8% below sales in March 2021 (484,000).   This decrease, NSA, was similar to change in the markets I track each month.

Housing Inventory is Slightly Above Record Low

The fourth graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 0.95 million in March from 0.85 million in February. Inventory is now just above the record low.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The fifth graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory is very low and was down 9.5% year-over-year (YoY) in February.  This includes some pending sales, and it seems likely that active inventory is down close to 15% year-over-year.

Months-of-supply at 2.0 months is above the record low set in January 2022.

It appears inventory will be up year-over-year in the next few months, but inventory will still be at very low levels.

Median House Price Growth Still Strong

On prices, the NAR reported:

The median existing-home price3 for all housing types in March was $375,300, up 15.0% from March 2021 ($326,300), as prices rose in each region. This marks 121 consecutive months of year-over-year increases, the longest-running streak on record.

Median prices are distorted by the mix (repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices).

The YoY change in the median price peaked at 23.6% in May and slowed to 12.6% in October (still very strong increase in prices). But has picked up a little again, and the YoY increase in March was similar to the YoY increase in February.

Finally, as usual, housing economist Tom Lawler's forecast was close to the NAR report. The NAR reported 5.77 million SAAR, Lawler estimated the NAR would report 5.74 million SAAR.

A key milestone will be when inventory is up year-over-year (YoY). My current guess is inventory will be up YoY near mid-year. Inventory will still be historically very low.

Also note that 30-year mortgage rates averaged 4.2% in March according to Freddie Mac. Now rates are around 5.35%. Sometimes people rush to buy as rates rise - anticipating further rate increases. However, eventually, higher rates will suppress demand. It seems likely we will see further negative impact on sales from higher rates, and more inventory in the coming months.