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OFFICIAL MAGAZINE OF THE NATIONAL ASSOCIATION OF REALTORS®

Daily Real Estate News  |  April 24, 2007  |   Weather Curtails March Existing-Home Sales
Winter weather reduced home shopping in February, slowing March sales. The pace of sales was likely further dampened by a decrease in subprime lending, according to the NATIONAL ASSOCIATION OF REALTORS®.

After rising for three consecutive months, total existing-home sales — including single-family, townhomes, condominiums and co-ops — fell 8.4 percent to a seasonally adjusted annual rate of 6.12 million units in March. That compares to a pace of 6.68 million in February, and is 11.3 percent below the 6.90 million-unit level in March 2006.

“For the last couple months we’ve been expecting a weather ‘hit’ on home sales,” says David Lereah, NAR’s chief economist. “But looking at overall activity in the first quarter we see that existing home sales averaged 6.41 million — a figure that is moderately higher than the sales pace during the second half of 2006.”

Lereah says the market may also be experiencing some of losses as a result of the subprime fallout. “However, this is masking improved fundamentals in the housing market, with lower mortgage interest rates and motivated sellers,” Lereah says. “It’s too early to measure a significant impact from tighter lending standards, which should moderately dampen activity, but we’re still looking for existing-home sales to gradually improve during the last half of 2007.”

A Closer Look at the Numbers

The national median existing-home price for all housing types was $217,000 in March, which is 0.3 percent below March 2006 when the median was $217,600. The median is a typical market price where half of the homes sold for more and half sold for less.

However, the percentage change in recent months has been distorted by a geographic shift in the composition of sales from high-cost markets to moderately priced areas, in contrast with the sales distribution a year earlier, according to NAR.

Here’s what happened regionally with existing-home sales:
  • South: existing-home sales declined 6.2 percent to an annual sales rate of 2.41 million in March, and 9.7 percent below March 2006. The median price in the South was $180,700, up 0.4 percent from a year ago.
  • Northeast: existing-home sales fell 8.2 percent to a level of 1.12 million in March; 5.1 percent lower than a year earlier. The median existing-home price in the Northeast was $268,600, which is 0.7 percent lower than March 2006.
  • West: existing-home sales fell 9.1 percent in March to an annual pace of 1.20 million, which is 16.7 percent lower than March 2006. The median price in the West was $330,600, down 2.9 percent from a year ago.
  • Midwest: existing-home sales dropped 10.9 percent in March to a level of 1.39 million, and is 13.7 percent lower than a year ago. The median price in the Midwest was $160,400, down 0.2 percent from March 2006.

Single-family home sales dropped 9.5 percent to a seasonally adjusted annual rate of 5.32 million in March from 5.88 million in February, and are 11.9 percent lower than the 6.04 million-unit level in March 2006. The median existing single-family home price was $215,300 in March, down 0.9 percent from a year earlier.

Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 800,000 units in March, the same as in February, and are 6.7 percent below the 857,000-unit level in March 2006. The median existing condo price was $228,200 in March, up 3.2 percent from a year ago.

A Buyers Market

NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., says market conditions are clearly favoring buyers. “It’s a good time to buy, in part because home buyers are not pressured to make quick decisions,” Combs says. “We’re in a window of low interest rates with a plentiful supply of homes on the market and flat prices in most areas. First-time buyers now have more power to negotiate with sellers for help on down payment or closing costs.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.16 percent in March, down from 6.29 percent in February; the rate was 6.32 percent in March 2006.

Total housing inventory levels fell 1.6 percent at the end of March to 3.75 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace, up from a 6.8-month supply in February.

— REALTOR® Magazine Online

For more housing market statistics and research reports, visit NAR's Research Department at REALTOR.org.

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