Existing-home sales dropped slightly in March, falling short of analysts’ expectations and highlighting how a shortage of inventory could be a speed bump in an otherwise solid recovery.
The sale of existing single-family homes, condominiums and co-ops declined by 0.6 percent, to a seasonally adjusted rate of 4.92 million, down from 4.95 million in February, according to the National Association of Realtors. Analysts were expecting sales to rise. Compared with March 2012, however, sales were up 10.3 percent.
Even though March’s drop was modest, it points to a larger problem: There aren’t enough homes on the market to keep up with demand, said Lawrence Yun, chief economist of the National Association of Realtors.
The housing inventory increased by 1.6 percent last month, but that wasn’t enough. It would take 4.7 months to sell all of the homes on the market at the current sales rate, according to industry data. That is well below the six to seven months of inventory usually seen in a healthy market, said Ryan Severino, senior economist at Reis, a real estate research firm.
“It can be a little difficult to find something [to buy] right now because inventory is low,” Severino said.
That low inventory could put pressure on some homeowners considering a sale, Yun said. “People who have been delaying putting their home on the market will realize they can’t wait any longer,” he said.
The lack of housing supply is also driving up home prices, which are staging a meteoric rise from the depths of the housing crisis in many parts of the country. The median price for existing homes was $184,300 in March, an increase of almost 12 percent, compared with March 2012, and the highest since November 2005.
Home prices rose 26.1 percent in the West, which includes states that were hit hard by the housing crisis such as California and Nevada. Prices there reached a median of $258,100. Prices in the Northeast and Midwest rose 3 percent and 7.8 percent, respectively, to $237,000 and $141,800.
In the South, which includes the Washington region, the median price was $161,700, an increase of more than 10 percent.
“Prices are up, but still down relative to the heady days of the housing market,” Severino said.
The steady price increase is good news for sellers, but not for buyers, Yun said. Mortgage rates remain near historic lows, but incomes are not increasing as quickly, he said.
There was also more evidence that the overhang of troubled mortgages is beginning to recede as the housing market heals. Foreclosures and short sales made up 21 percent of sales in March, down from 25 percent in February and 29 percent in March 2012, according to the report.
The number of foreclosures continues to drop nationwide, according to a report from LPS Applied Analytics, a market research company, to be released Tuesday. The total number of delinquent mortgages and foreclosures fell below 5 million during the first quarter for the first time since 2008, according to the report.
“The trend for improvement [in delinquencies] is likely to continue,” said Herb Blecher, senior vice president of LPS.