Existing Home Sales Drop 3.6 Percent in March as Consumer Confidence Wanes

Sales of existing homes in March slumped by 3.6 percent from the previous month in a sign of waning consumer confidence and sluggish job growth, the National Association of Realtors (NAR) said in a new report released on April 13.

Consumer sentiment plummeted by 11 percent in April versus March as the U.S.–Israel war with Iran, surging fuel costs, and higher prices weighed on personal finances, a University of Michigan survey found. On the employment front, U.S. employers added 178,000 jobs in March, with the unemployment rate stagnant at 4.3 percent, the Bureau of Labor Statistics reported on April 3.

Those factors—along with elevated interest rates on 30-year fixed mortgages—combined to stifle the volume of existing homes sales for March.

“The stagnant housing market is constrained by sluggish hiring and downbeat consumer sentiment,” Mark Hamrick, senior economic analyst for Bankrate, said in a statement provided to The Epoch Times.

“Furthermore, the full-year outlook is now less positive because of rising mortgage rates. Another negative for the market is low inventory, or a shortage of homes available for sale.”

Month-over-month home sales dipped in all four regions, the NAR report noted. The median sales price of $408,800 was up by 1.4 percent from a year earlier and is the 33rd straight month that home values saw a year-over-year price increase. It’s also a record high for March.

Continued lack of available inventory, meanwhile, placed additional constraints on the volume of existing home sales, according to NAR Chief Economist Lawrence Yun.

“The supply-to-demand ratio is below historical norms,” Yun said.

“An additional 300,000 to 500,000 homes for sale would help bring the market closer to normal conditions and allow consumers to make purchase decisions without feeling rushed.”

Lackluster sales volume in March led the NAR to downgrade its forecast of existing home sales for the full calendar year to a modest 4 percent increase versus last year’s robust prediction of 14 percent growth. Sales of new homes are predicted to remain flat, a downward revision from the previous forecast of a 5 percent gain.

Median sales prices, however, held to their projected increase of 4 percent for the year, the NAR noted.

“Mortgage rates have been rising, and that has led us to trim our home sales outlook for the year,” Yun said. “Even with a more modest pace of sales growth, home prices continue to steadily increase due to minimal inventory growth.”

Thirty-year fixed mortgage rates have steadily ticked up from their late February low of 5.98 percent to 6.37 percent on April 9, Freddie Mac reported.

Regionally, month-over-month existing home sales declined most sharply in the Northeast at 8.5 percent, followed by a 4.2 percent decline in the Midwest and a 3.1 percent drop in the South. Existing home sales declined by just 1.3 percent in the West, but the median sales price of $613,400 was a 1.3-percent year-over-year decline, and the West was the only one of the four primary regions to realize a drop in median sales price, according to the NAR.