The sale of previously-owned US homes rose faster than forecast in March, a sign the market was gaining traction at the end of the first quarter following a harsh winter season.
Existing home sales surged 6.1 percent to a seasonally adjusted annual rate of 5.19 million in March, the National Association of Realtors reported on Monday. A median estimate of economists called for a 3 percent gain to 5.03 million.
Sales increased in all four major regions, led by a 10.1 percent surge in the Midwest. Existing home sales rose 6.9 percent in the Northeast, 6.3 percent in the West and 3.8 percent in the South, NAR data showed.
Total inventory at the end of March increased 5.3 percent to 2 million and are now 2 percent above year-ago levels. At the current sales pace, it would take 4.7 months to clear existing inventories.
The median sale price of previously-owned homes increased for the thirty-seventh consecutive month in annualized terms. The average sales price in March was $212,100, which is 7.8 percent higher than year-ago levels.
“After a quiet start to the year, sales activity picked up greatly throughout the country in March,” said NAR chief economist Lawrence Yun in a statement. “The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years.”
Adds Yun, “For sales to build upon their current pace, homeowners will increasingly need to be confident in their ability to sell their home while having enough time and choices to upgrade or downsize. More listings and new home construction are still needed to tame price growth and provide more opportunity for first-time buyers to enter the market.”
Housing prices rose 0.7 percent in February, according to the Federal Housing Finance Agency’s housing price index. The monthly reading, which was also released on Wednesday, estimates changes in house prices for the nine Census Bureau divisions in all 50 US states and DC.
Mortgage rates remain very low by historical standards, which could provide a greater catalyst for existing home sales in the coming months. The average commitment rate on a 30-year fixed rate mortgage averaged 3.77 percent in March, well below the 2014 rate of 4.34 percent. Rates are much lower than they were in 2011, when a 30-year commitment rate was 4.84 percent.
Mortgage rates have continued to edge lower in April, according to Freddie Mac. The commitment rate on a 30-year fixed rate mortgage averaged 3.67 percent in the week ending April 16.
The Commerce Department will report on new home sales on Thursday. New home sales are forecast to decline 3 percent to a seasonally adjusted annual rate of 523,000, according to economists.