U.S. Existing Home Sales Rise; Prices Fall
Sales of previously owned U.S. homes rose more than expected in March, a trade group said on Wednesday, suggesting the housing market's downward trend may be close to hitting a bottom.
The National Association of Realtors said sales rose 3.7 per cent month over month to an annual rate of 5.10 million units after an upwardly revised 4.92 million unit pace in February.
Economists polled by Reuters had expected sales to rise 2.5 per cent to a 5.0 million-unit pace from the previously reported 4.88 million unit rate. Sales have now risen in six of the past eight months.
"It's slow, steady progress, but you cannot not be disturbed by the slow pace of recovery," said Pierre Ellis, an economist at Decision Economics in New York. "Demand is rising even with higher mortgage rates so that's encouraging."
The housing market is struggling to find its footing as a wave of foreclosed properties keeps supply elevated and prices depressed.
Last month, foreclosures and short sales, which typically occur at about 20 per cent below market value, accounted for 40 per cent of transactions. That was the highest since April 2009 and was up from 39 per cent in February.
The median home price fell 5.9 per cent in March from a year earlier to $159,600. Compared with March last year, sales were down 6.3 per cent.
"A sustained turnaround in the housing market is still far off based on earlier-released depressed readings for housing starts, building permits and builders' confidence indices," said Krishen Rangasamy an economist at CIBC World Markets in Toronto.
MORTGAGE APPLICATIONS UP
A separate report on Wednesday showed demand for home loans rose last week, as interest rates eased and purchase activity picked up. The Mortgage Bankers Association said its purchase index rose 10 per cent to 210.8, the highest since early December.
Last month, all-cash purchases made up a record 35 per cent of sales in March and the NAR said the lower and upper ends of the market were showing strong activity, with the middle part -- which accounts for the existing housing market -- remaining sluggish.
Sales last month rose across the board, with multifamily dwellings rising 1.6 per cent and single-family home units advancing 4 per cent.
At March's sales pace, the supply of existing homes on the market slipped to 8.4 months' worth from 8.5 months in February. However, the number of previously owned homes on the market rose 1.5 per cent to 3.55 million.
A supply of between six and seven months is generally considered ideal, with higher readings pointing to lower house prices.