While the National Association of Realtors released a report Thursday morning showing that existing home sales fell by more than expected in the month of March, the trade group noted that first-time buyers are responding to low mortgage interest rates and tax credits.
The report showed that existing home sales fell 3.0 percent to an annual rate of 4.57 million units in March from a downwardly revised level of 4.71 million in February. With the monthly decrease, existing home sales were down 7.1 percent compared to the same month a year ago.
Economists had expected existing home sales to fall to a 4.65 million unit rate from the 4.72 million unit rate originally reported for the previous month.
While sales fell by more than expected, Lawrence Yun, NAR chief economist, suggested that the market appears to be stabilizing with modest monthly ups and downs. Yum added that first-time buyers are driving the market.
The share of lower priced home sales has trended up, indicating a return of many first-time buyers, Yun said. Sales in the upper price ranges remain stalled because of higher interest rates on jumbo loans.
The report also showed that the national median existing-home price rose 4.2 percent from February to March to $175,000, although the median price is down 12.4 percent year-over-year.
NAR added that total housing inventories at the end of March fell 1.6 percent to 3.74 million existing homes available for sale. This represents a 9.8-month supply at the current sales pace, up slightly from a 9.7-month supply in February due to a slower pace of sales.
The bigger than expected decrease in existing home sales reflected lower sales in three out of the four regions of the country.
While existing home sales in the Northeast and the West fell by 8.0 percent and 4.2 percent, respectively, sales in the South showed a more modest 1.7 percent decrease. At the same time, existing home sales in the Midwest were unchanged.
NAR President Charles McMillan noted, The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down, according to their needs.
Additional housing data is due to be released on Friday, with the Commerce Department set to release its report on new home sales in March. The report is expected to show that new home sales edged up to 340,000 from 337,000 in February.
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