Summary

The National Association of Realtors (NAR) reports a decline in existing home sales, with a 10% drop expected for the year, alongside rising inventory levels and increasing average home prices.

Abstract

According to the National Association of Realtors (NAR), existing home sales in the U.S. have decreased by 2.7% in March compared to February and by 4.5% compared to the previous year. This marks the second consecutive month of decline. The inventory of unsold existing homes has risen to 950,000, suggesting a potential moderation in the rise of home prices, which currently average $375,300, a 15% increase from the year before. Single-family homes have been particularly affected, with sales falling and inventory rising more than the overall market. NAR's chief economist, Lawrence Yun, attributes the downturn to rising mortgage rates and inflation, predicting a 10% contraction in transactions and a readjustment of price gains to around 5% for the year.

Opinions

Lawrence Yun, NAR’s chief economist, believes that the decline in home sales is due to "sharply rising mortgage rates and higher inflation taking a hit on purchasing power."
Yun forecasts a 10% decrease in real estate transactions for the year and expects home price gains to slow down to approximately 5%, which may not be uniform across the U.S., especially in regions with higher home values.
The author suggests that the rising inventory levels could lead to lower or more slowly increasing home prices, indicating a potential shift in the housing market dynamics.
The article implies that the trend of lower home sales could continue, affecting sellers and investors in the real estate market.
The author explicitly states that the information provided is not financial advice and that they are relying on the "publisher's exclusion" in the Investment Advisers Act of 1940, meaning the analysis is for informational purposes only and not personalized investment advice.

Homes

Home Sales Are Down — Expect More

The National Assoc. of Realtors says home sales will fall 10% this year

The National Association of Realtors (NAR) released their March sales of existing homes stats on April 20. The bottom line is that homes sales have fallen for the second month in a row.

Existing home sales are down 2.7% in March from February, and they declined 4.5% from a year ago in March.

“ Existing-home sales fell for the second straight month in March to a seasonally adjusted annual rate of 5.77 million. Sales were down 2.7% from the prior month and 4.5% from a year ago.”

Moreover, the NAR said the inventory level is rising. That could potentially support lower prices or a slower rise in prices. Here is actually what they said.

“ With slower demand, the inventory of unsold existing homes increased to 950,000 as of the end of March. That would support 2.0 months at the monthly sales pace.”

Nevertheless, the average home price is now: $375,300, up 15% from one year ago.

Single Family Homes Fared Worse

Total home sales used in this statistic include single-family homes, townhomes, condominiums, and co-ops. If we focus solely on single-family homes, the data is actually worse.

This can be seen in the following table that the NAR provided:

National Assoc. of Realtors — Single Family Homes

It shows that in March home sales fell 2.7% month-over-month, and 3.8% YoY. However, the total inventory actually rose 12.2%. These are for seasonally adjusted figures.

Moreover, the worst sales performance was in the Northeast. The best was in the West, where month-over-month performance was flat, although it is down 4.5% YoY.

If this trend of broad lower home sales continues, there could be a moderating effect on higher prices, and may eventually lead to lower prices.

Lawrence Yun, NAR’s chief economist said this reflects “sharply rising mortgage rates and higher inflation taking a hit on purchasing power.”

Yun predicts transactions to contract by 10% this year, for home prices to readjust, and for gains to grow around 5%. By gains, he is referring to house price gains. This may not be consistent with a falling sales environment, especially in certain areas of the US with higher home prices.

The bottom line here is that sellers and investors in the real estate market can expect to continue to see lower sales of existing total homes in the U.S.

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This is not financial advice and you should not rely on my analysis to buy or sell any stock, bond, REIT, crypto, home, or insurance product as I am not undertaking to induce you to buy or sell any securities or financial assets or home products.

I am relying on the “publisher’s exclusion” in the Investment Advisers Act of 1940 to provide this information without any personalized or individualized investment advice.

Mark Hake writes articles on InvestorPlace.com, Barchart.com, Medium.com, and Newsbreak.com on stocks and cryptos.