More Bad News for Housing Market As Sales Drop
More trouble is hitting the housing market.
The median price for existing homes soared 15% in March from a year earlier to $375,000. That’s the highest level since the National Association of Realtors (NAR) began tracking the data in 1999.
Among cities, the highest March price increases came in Miami-Fort Lauderdale-West Palm Beach (37% year-on-year), Las Vegas-Henderson-Paradise (35%) and Tampa-St. Petersburg-Clearwater (up 32%).
The national price increase, combined with rising mortgage rates, helped push existing home sales down 2.7% in March from February and down 4.5% from a year ago.
Sales registered a seasonally-adjusted annual rate of 5.77 million in March.
As for mortgage rates, the average commitment rate for a 30-year, conventional, fixed-rate mortgage totaled 4.17% in March, up from 3.76% in February, according to mortgage agency Freddie Mac.
The average commitment rate for all of 2021 was 2.96%.
NAR’s Analysis
“The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power,” Lawrence Yun, NAR’s chief economist, said in a statement. “Still, homes are selling rapidly, and home price gains remain in the double-digits.”
Given expectations for a continued climb by mortgage rates, Yun expects existing home sales to drop 10% this year. But there is a silver lining to the clouds, with Yun saying he sees home price appreciation decelerating to about 5% this year.
Scroll to Continue
“Home prices have consistently moved upward as supply remains tight,” Yun said. “However, sellers should not expect the easy-profit gains and should look for multiple offers to fade as demand continues to subside.”
Another piece of good news is that the housing supply shortage seems to be easing a bit.
Total housing inventory at the end of March totaled 950,000 units, up 11.8% from February, though it’s still down 9.5% from a year ago.
Unsold inventory sits at a two-month supply at the present sales pace, up from 1.7 months in February but down from 2.1 months in March 2021.
Mortgage Applications
Meanwhile, mortgage applications fell 5% seasonally-adjusted in the week ended April 15 from a week earlier, according to the Mortgage Bankers Association.
Refinancing applications dropped 8% from the previous week and were 68% percent lower than a year ago.
Seasonally-adjusted purchase applications slid 3% from a week earlier, and unadjusted purchases were 14% lower than a year ago.
“Ongoing concerns about rapid inflation and tighter U.S. monetary policy continued to push Treasury yields higher, driving mortgage rates to their highest level in over a decade,” said MBA economist Joel Kan.
The 10-year Treasury yield has jumped 142 basis points so far this year to 2.93%
“[Mortgage] rates increased across the board for all loan types, with the 30-year fixed rate hitting 5.2%, the highest level since 2010,” Kan said.
