Sales of existing homes declined slightly in March, according to the National Association of Realtors (NAR). Three out of the four major sales regions in the country reported month-over-month decreases, with sales steady in the Northeast. However, year-over-year sales declined in all regions. Yet with consumer price inflation starting to ease, and with a boost in apartment construction expected to lead to declining rents, Lawrence Yun, chief economist for NAR, remains confident in the market. “The Federal Reserve’s monetary policy will surely shift from tightening to neutral to possibly loosening over the next 12 months. Therefore, home sales will steadily rebound despite several months of fluctuations.”

Starter Homes in High Demand
Home sales are feeling the effects of fluctuating mortgage rates, but one segment of the housing market is booming. “Multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand,” said Yun. By the end of March, there were 980,000 homes available for sale, up 1% from a month ago and 5.4% from a year ago. At the current sales pace, this level of inventory would last 2.6 months, unchanged from February and up from a two-month supply in March 2022.

Home Prices Adjusting to Market Conditions
Three sales regions reported higher home prices, while prices declined in the West. According to Yun, more expensive areas of the country are seeing lower prices, while “prices continue to rise in regions where jobs are being added and housing is relatively affordable.” The median existing-home price for all housing types dropped by 0.9% from a year earlier. The average property remained on the market for 29 days in March, down from 34 days a month ago but up from 17 days a year ago. Of all the homes sold in March 2022, 65% remained available for under 30 days.

Who’s Buying Homes?
First-time buyers accounted for 28% of all March transactions, up from 27% in February but down from 30% in March 2022. Twenty-seven percent of all transactions were all cash, down from 28% both a month and a year ago. Individual investors and second-home buyers, two groups who tend to purchase with cash, were responsible for 17% of home purchases in March, down from 18% both a month and a year ago. Distressed sales, meanwhile, accounted for just 1% of all sales, virtually unchanged from February and March 2022.

Regional Sales Breakdown

Northeast: Existing-home sales annual rate of 520,000; unchanged from February 2023 but a decrease of 21.2% from March 2022. The median sales price of $395,400 represents a 1% increase from March 2022.

Midwest: Existing-home sales annual rate of 1.03 million; a decrease of 5.5% from February 2023 and 17.6% from March 2022. The median sales price of $273,400 represents a 1.7% increase from March 2022.

South: Existing-home sales annual rate of 2.07 million; a decrease of 1% from February 2023 and 20.4% from March 2022. The median sales price of $347,600 represents an increase of 0.3% from March 2022.

West: Existing-home sales annual rate of 820,000; a decrease of 3.5% from February 2022 and 30.5% from March 2023. The median price of $565,400 represents a decrease of 7.5% from March 2022.