Sales of previously owned homes rose more than forecast in March to the fastest pace in a decade, signaling sustained momentum in the housing market despite higher prices and scarce supply, a report from the National Association of Realtors showed Friday.
Contract closings jumped 4.4% to a 5.71 million annual rate (the forecast was 5.6 million), the highest since February 2007, after a revised 5.47 million the prior month. The median sales price rose 6.8% from a year earlier to $236,400. Inventory of available properties fell 6.6% from March 2016 to 1.83 million, marking the 22nd straight year-over-year decline.
The stronger-than-expected pickup indicates that steady hiring and healthier household finances continue to underpin demand. That's coming even as the tight supply keeps boosting property prices faster than wage growth, making them more of a hurdle for potential buyers, though mortgage rates have fallen in recent weeks following a post-election surge.
While March data released earlier this week showed single-family housing starts eased, they remain close to the highest level in almost a decade.
"This is a very broad-based recovery" in the housing market, Lawrence Yun, NAR's chief economist, said at a press briefing accompanying the report. "Both sales as well as prices are running very solidly" and "buyers are not being deterred by these affordability challenges." Policy changes could "quickly change" the direction of housing in the second half, he said.
March sales rose in three of four regions, including a 3.4% increase in the South and a 1.6% drop in the West. At the current pace, it would take 3.8 months to sell the homes on the market, unchanged from February. The Realtors group considers less than a five-month supply as consistent with a tight market.
Single-family home sales increased 4.3% last month to an annual rate of 5.08 million. Purchases of condominium and co-op units rose 5% to a 630,000 pace. First-time buyers accounted for 32% of all sales in March, unchanged from February. Homes sold in 34 days, compared with 45 days in February and 47 days in March 2016.
