Low Inventories Plague Housing Market

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The National Association of Realtors (NAR) reports that the seasonally adjusted annual rate of existing home sales in March declined 0.6% to 4.92 million from a downwardly revised total of 4.95 million in February. However, sales are up 10.3% year-over-year for the month of March. The March number follows a month when sales were the highest since the tax credit period of November 2009.

Housing inventory rose again in March, increasing by 1.6%, just keeping equal to February’s supply of 4.7 months. Listed inventory is down 16.8% year-over-year, when there was a 6.2 month supply available. Total housing inventory at the end of March was 1.93 million homes for sale.

According to the NAR, the national median existing home price in March was $184,300, up 11.8% compared with March 2012 and the 13th consecutive month to see a price gain. The last time housing prices went on such a string of price increases was the period between May 2005 and May 2006.

NAR’s chief economist said:

Buyer traffic is 25 percent above a year ago when we were already seeing notable gains in shopping activity. In the same timeframe housing inventories have trended much lower, which is continuing to pressure home prices. The good news is home construction is rising and low mortgage rates are continuing to keep affordability conditions at historically favorable levels. … The inventory improvement last month results from a seasonal gain, but conditions continue to broadly favor sellers.

Foreclosed and short sales accounted for 21% of March sales, down from 25% in February sales, and below the 29% share in March 2012. Foreclosures sold at an average 15% discount to the March median price, while short sales sold at a discount of 13%. Both discounts decreased month-over-month.