NAR: March Existing-Home Sales Rise 3.7%

Sales of existing-home sales rose in March,
continuing an uneven recovery that began after sales bottomed last July,
according to the NATIONAL ASSOCIATION OF REALTORS
®.

Existing-home sales, which are
completed transactions that include single-family, townhomes, condominiums and
co-ops, increased 3.7 percent to a seasonally adjusted annual rate of 5.10
million in March from an upwardly revised 4.92 million in February, but are 6.3
percent below the 5.44 million pace in March 2010. Sales were at elevated levels
from March through June of 2010 in response to the home buyer tax
credit.

Lawrence Yun, NAR chief
economist, expects the improving sales pattern to continue. “Existing-home sales
have risen in six of the past eight months, so we’re clearly on a recovery
path,” he said. “With rising jobs and excellent affordability conditions, we
project moderate improvements into 2012, but not every month will show a gain –
primarily because some buyers are finding it too difficult to obtain a mortgage.
For those fortunate enough to qualify for financing, monthly mortgage payments
as a percent of income have been at record lows.”

NAR’s housing affordability index shows the typical monthly mortgage
principal and interest payment for the purchase of a median-priced existing home
is only 13 percent of gross household income, the lowest since records began in
1970.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84 percent in
March, down from 4.95 percent in February; the rate was 4.97 percent in March
2010.

Data from Freddie Mac and Fannie Mae
show requirements to obtain conventional mortgages have been tightened, with the
average credit score rising to about 760 in the current market from nearly 720
in 2007; for FHA loans the average credit score is around 700, up from just over
630 in 2007.

“Although home sales are coming
back without a federal stimulus, sales would be notably stronger if mortgage
lending would return to the normal, safe standards that were in place a decade
ago – before the loose lending practices that created the unprecedented boom and
bust cycle,” Yun explained.

“Given that
FHA and VA government-backed loan programs turned a modest profit over to the
U.S. Treasury last year, and have never required a taxpayer bailout, we believe
low-downpayment loans should continue to be available for those consumers who
have demonstrated financial responsibility and are willing to stay well within
their budget. Raising the downpayment requirement would unnecessarily deny
credit to many worthy middle-class families and veterans,” Yun
said.

A parallel NAR practitioner survey
shows first-time buyers purchased 33 percent of homes in March, compared with 34
percent of homes in February; they were 44 percent in March
2010.

Record Share of All-Cash
Sales

All-cash sales were at a record
market share of 35 percent in March, up from 33 percent in February; they were
27 percent in March 2010. Investors accounted for 22 percent of sales activity
in March, up from 19 percent in February; they were 19 percent in March 2010.
The balance of sales were to repeat buyers.

The national median existing-home price for all housing types was
$159,600 in March, down 5.9 percent from March 2010. Distressed homes –
typically sold at discounts in the vicinity of 20 percent – accounted for a 40
percent market share in March, up from 39 percent in February and 35 percent in
March 2010.

NAR President Ron Phipps said some renters
are looking to home ownership as a hedge against inflation. “The typical buyer
today plans to stay in a home for 10 years, while rents are projected to rise at
faster rates over the next few years,” he said. “As buyers gain more financial
security, the advantages of home ownership become more obvious. Rents will
continue to trend up, especially in comparison with a fixed-rate loan which
provides financial stability and gradual accumulation of equity over
time.”

Total housing inventory at the end
of March rose 1.5 percent to 3.55 million existing homes available for sale,
which represents an 8.4-month supply
at the
current sales pace, compared with a 8.5-month supply in
February.

Single-family home sales rose
4.0 percent to a seasonally adjusted annual rate of 4.45 million in March from
4.28 million in February, but are 6.5 percent below the 4.76 million level in
March 2010. The median existing single-family home price was $160,500 in March,
down 5.3 percent from a year ago.

Existing
condominium and co-op sales increased 1.6 percent to a seasonally adjusted
annual rate of 650,000 in March from 640,000 in February, but are 4.1 percent
below the 678,000-unit pace one year ago. The median existing condo
price
was $153,100 in March, which is 10.1
percent below March 2010.

Regions:
Northeast

Regionally, existing-home sales
in the Northeast rose 3.9 percent to an annual level of 800,000 in March but are
12.1 percent below March 2010. The median price in the Northeast was $232,900,
down 3.0 percent from a year ago.

Midwest
Existing-home sales in
the Midwest increased 1.0 percent in March to a pace of 1.06 million but are
13.1 percent lower than a year ago. The median price in the Midwest was
$126,100, which is 7.1 percent below March 2010.

South
In the South,
existing-home sales rose 8.2 percent to an annual level of 1.99 million in March
but are 1.0 percent below March 2010. The median price in the South was
$138,200, down 6.6 percent from a year ago.

West
Existing-home sales in the
West slipped 0.8 percent to an annual pace of 1.25 million in March and are 3.1
percent below a year ago. The median price in the West was $192,100, which is
11.2 percent lower than March 2010.

—NAR

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