In March 2022, sales of existing homes fell to a seasonally adjusted annual rate (SAAR) of 5.77 million, per data from the National Association of Realtors (NAR) released on April 20, 2022. This was a decrease of 2.7% from February, and sales fell in all four U.S. regions. The inventory of unsold existing homes rose by 11.8% to 950,000, equal to 2.0 months of sales at the pace set in March. The median sales price for existing homes was up by 15.0% on a year-over-year (YOY) basis to $375,300.
The negative report on existing-home sales follows two mixed readings on the U.S. housing market released earlier this week. In March, housing starts were up slightly. However, in early April, homebuilders reported a deteriorating outlook for single-family starts in the upcoming months.
- Existing-home sales fell by 2.7% from February to March 2022 on a seasonally adjusted annual basis.
- The median price of existing homes was up by 15.0% YOY.
- Inventories of unsold homes are rising, but time on the market for properties is falling.
Home Sales Also Down YOY
Existing-home sales represent completed transactions that include single-family homes, townhomes, condominiums, and co-ops. As noted above, this figure fell by 2.7% from February to March 2022, reaching a seasonally adjusted annual rate of 5.77 million. On a YOY basis, sales fell by 4.5% from 6.04 million in March 2021.
Lawrence Yun, the NAR's chief economist, commented: "The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power. Still, homes are selling rapidly, and home price gains remain in the double-digits."
With mortgage rates expected to continue rising, Yun predicts that transactions will contract by 10% this year. He also expects home prices to readjust, reducing YOY price gains to around 5%.
Impact of First-Time and Second-Home Buyers
First-time buyers represented 30% of sales in March, up from 29% in February and down from 32% in March 2021. In 2021, the annual share of first-time buyers was 34%.
"It appears first-time homebuyers are still looking to lock in at current mortgage rates before they inevitably increase," Yun said.
Individual investors or second-home buyers, who make up many cash sales, purchased 18% of homes in March, down from 19% in February but up from 15% in March 2021. All-cash sales accounted for 28% of transactions in March, up from the 25% recorded in February and from 23% in March 2021.
"With rising mortgage rates, cash sales made up a larger fraction of transactions, climbing to the highest share since 2014," Yun said.
Distressed sales, which include foreclosure sales and short sales (short sales involve properties whose value is below the amount due on the mortgage), were less than 1% of total sales in March 2022. This was unchanged from both February 2022 and March 2021.
Time on the Market Getting Shorter
Properties typically remained on the market for 17 days in March, down from 18 days in February and 18 days in March 2021. About 87% of homes sold in March 2022 were on the market for less than a month.
Home Prices Still Rising Briskly
The median existing-home price for all housing types in March 2022 was $375,300, up by 15.0% from March 2021, when it was $326,300. Prices rose in each region. This now marks 121 consecutive months of YOY increases, adding to an already record-long streak.
Yun observed: "Home prices have consistently moved upward as supply remains tight. However, sellers should not expect the easy-profit gains and should look for multiple offers to fade as demand continues to subside."
Inventories Rise in March
Total housing inventory at the end of March was 950,000 units, up by 11.8% from February but down by 9.5% from 1.05 million in March 2021. Unsold inventory now equals 2.0 months of supply at the present sales pace, up from 1.7 months in February and down from 2.1 months in March 2021.
Compared to February, three of the four major U.S. regions experienced a month-to-month drop in sales in March. The northeast was down by 2.9%, the midwest by 4.5%, and the south by 3.0%, while sales in the west "held steady."
On a YOY basis, all four regions reported declines: the northeast by 11.8%, the midwest by 3.1%, the south by 3.0%, and the west by 4.7%.
Median prices surged in all four regions YOY: by 6.8% in the northeast, by 10.4% in the midwest, by 21.2% in the south, and by 5.4% in the west. The median prices in these regions are now, respectively, $390,200, $271,000, $339,000, and $519,900.