Sales of existing homes in March 2023 plunged, accounting for the slowest pace for March since 2009. According to the National Association of Realtors, home sales dropped by 5.9% in February. That marked a decline of 1.8 percent, with the total settling at 4.02 million units on a seasonally adjusted annualized basis. This drop-off is representative of the larger struggles prevalent in the housing market, especially as home values are still high.
The gain pushed the median price of an existing home sold in March to $403,700, an all-time high for the month. This number only represents a lackluster increase of 2.7% from March of 2022. Year-over-year home sales dropped 2.4% from sales in the same month last year. This decline, even with the rise in annual pricing, indicates a possible shift towards a slowing buyer demand.
The average rate on the widely used 30-year fixed mortgage had a big hand in that deceleration. In fact, it was above 7% in January and February. The average rate didn’t fall below that level until February 20, limiting buyers’ purchasing power—and choice—and cooling their urgency to buy. This mixture of exorbitant mortgage rates and skyrocketing home prices has kept a great deal of would-be purchasers from moving into the housing market.
Sales are way down, particularly at the all-cash end of the spectrum. They fell to 26% in March, a decline from 28% a year ago. Sales to investors held firm, making up on average 15% of sales through this time. Typically, first-time buyers make up around 40% of the market. They accounted for only 32% of sales in March, highlighting the tough market environment new entrants are up against.
At the end of March, inventory levels showed signs of improvement, with 1.33 million units for sale—an increase of nearly 20% from March 2022. This increase in housing inventory means we’re now at a sales pace that amounts to a four-month supply of houses on hand. Conversely, a neutral or balanced market usually functions with a six-month supply of homes for sale.
That contrasts with the western half of the United States where sales fell 23% year-over-year. This growth was largely attributed to unprecedented activity in the Rocky Mountain states. On a month-to-month basis all regions saw declines—with the very western sales declining more than 9%.