Two reports released this week suggest that March was a solid month for the U.S. housing market, an unexpected turnaround for a housing market that had slowed down.
The National Association of Realtors reported that existing homes sold at a seasonally adjusted annual pace of 6.92 million units in March, up from February’s pace but below the year-ago level.
The Census Bureau said new home sales showed surprising strength as well. Buyers scooped up new homes at a seasonally adjusted annual pace of 1.213 million units — 13.8 percent higher than in February.
Both reports outdid analysts’ expectations.
Wasn’t the housing market supposed to be slowing down? Yes, analysts have been talking about an expected slowdown for the past year.
It’s said that as interest rates go up, buyer interest wanes. Freddie Mac said the interest rate on a 30-year fixed-rate mortgage was 6.32 percent, 0.39 percent higher than a year ago. So where’s the slowdown?
If you dig into the reports, though, you will begin to see signs of a weaker market.
Median prices for both new and existing homes were flat, or down in March. The median price for existing homes was $218,000 last month — same as in February. New homes saw the median price drop $15,700 to $224,200 during March as builders began to cut prices to get rid of inventory.
“New home sales sprang back to life like a vampire in a cheap horror flick,” said economist Bob Brusca. “And like that zombie in the movies, housing really is dead. Don’t let all that twitching fool you.”
Analysts suggested that inventories — the number of new and existing homes for sale — are at multiyear highs, and that’s a sure sign that the market is slowing on the demand side.
At this point, the country could sell new and existing homes for five-and-a-half months without adding a single new “For Sale” sign. That’s a level we haven’t seen in more than seven years.