Existing-home sales rise as properties draw quick bids

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Sales of previously owned homes rose to a four-month high in March as buyers, fueled by a solid job market and tax cuts, quickly snapped up the limited number of available properties.

Contract closings advanced 1.1% month-over-month to a 5.6 million unit annual rate from 5.54 million in February, National Association of Realtors data showed.

The median sales price rose 5.8% compared with March 2017 to $250,400. The inventory of available properties fell 7.2% from a year ago to 1.67 million, lowest for March in data back to 1999

The increase reflected gains in higher-priced homes as well as condominiums and co-op units, according to the NAR. Even with the advance in sales, concerns about low inventory remain prominent, with the limited number of new properties pushing up costs and reducing activity at the lower end. Half of the homes sold in March were on the market for less than a month, the group said.

Sales of homes priced between $100,000 and $250,000 were down 7.8% from a year ago, while homes at $750,000 or above were up more than 15%. Inventories are expected to pick up around late summer or autumn in part because housing permits are rising and construction wages are advancing, drawing in more workers. There's also the potential for regulatory changes among small banks, a key source of loans to homebuilders.

While the U.S. tax law passed in December has given Americans more disposable income that may support housing demand, it also put new limits on deductions for mortgage interest and local property taxes, reducing incentives in areas such as New York and New Jersey. Potential homebuyers are citing the tax law less frequently as a worry, though they are concerned about interest rates rising, NAR said.

"The March figure is good; we are still being challenged by the lack of inventory, however," Lawrence Yun, NAR's chief economist, said at a press briefing accompanying the report. New listings are up compared with a year ago, but they "are being gobbled up quickly. Low-end inventories are being drained away," and with so little supply, there are few transactions, he said.

Existing home purchases advanced in two of four regions, led by a 6.3% gain in the Northeast compared with February. Sales in the Midwest rose 5.7%, while the South was down 0.4% and the West was 3.1% lower.

At the current pace, it would take 3.6 months to sell the homes on the market, compared to 3.4 months in February; the Realtors group considers less than a five-month supply as consistent with a tight market.

Single-family home sales increased 0.6% last month to an annual rate of 4.99 million. Purchases of condominium and co-op units rose 5.2% to a 610,000 pace.

Homes spent 30 days on market, compared with 37 days in February and 34 days in March 2017.

First-time buyers made up 30% of sales, down from 32% a year ago. "There are simply not enough homes for sale in their price range," NAR President Elizabeth Mendenhall said in statement.

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