Tight Inventory Sustains Home Price Growth Despite Slowest March Sales Since 2009

The median existing home sales price rose 1.4% annually to $408,800 in March, marking the 33rd consecutive month of year-over-year increases. This price growth persists despite existing home sales falling 3.6% month-over-month to a seasonally adjusted annual rate of 3.98 million. This is the slowest pace of March home sales since 2009.

Sales activity was constrained by lower consumer confidence, softer job growth, and rising mortgage rates. Rates jumped from 5.98% prior to the conflict in Iran to 6.37% last week. Small and midsized homebuilders reported similar cooling; 35% of builders saw year-over-year sales declines in March, up from 23% in February. In response, 23% of builders lowered some, most, or all base prices, and 24% increased incentives.

Price support remains tied to a lack of supply. While existing home inventory rose 3.0% in March to 1.36 million units, the market holds a 4.1-month supply. National Association of Realtors chief economist Lawrence Yun stated that an additional 300,000 to 500,000 homes would be required to bring the market closer to normal conditions. Because the supply-to-demand ratio remains below historical norms, the median sales price has continued to climb.