March came in like a lion but didn’t go out like a lamb by any means. From business shutdowns to bad real estate, COVID-19 has affected the world.
For example, existing-home sales fell in March following a February that saw significant nationwide gains, according to the National Association of Realtors. Each of the four major regions reported a dip in sales, with the West suffering the largest decrease.
Total existing-home sales,1 completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 8.5% from February to a seasonally-adjusted annual rate of 5.27 million in March. Despite the decline, overall sales increased year-over-year for the ninth straight month, up 0.8% from a year ago (5.23 million in March 2019), according to a NAR news release.
While sales have declined, home prices are still solidly strong. The median existing-home price2 for all housing types in March was $280,600, up 8.0% from March 2019 ($259,700), as prices increased in every region. March’s national price increase marks 97 straight months of year-over-year gains.
Total housing inventory3 at the end of March totaled 1.50 million units, up 2.7% from February, but down 10.2% from one year ago (1.67 million). Unsold inventory sits at a 3.4-month supply at the current sales pace, up from three months in February and down from the 3.8-month figure recorded in March 2019, the release said.
“Earlier in the year, we watched inventory gradually tick upward but with the current quarantine recommendations in place, fewer sellers are listing homes, which will limit buyer choices,” Yun said in the news release. “Significantly more listings are needed and more will come on to the market once the economy steadily reopens.”
NAR’s most recent Flash Survey showed that 93% of sellers changed behavior to help the homebuying transaction move forward with social distancing and necessary precautions.
Properties typically remained on the market for 29 days in March, seasonally down from 36 days in February, and down from 36 days in March 2019. Fifty-two percent of homes sold in March 2020 were on the market for less than a month.
First-time buyers were responsible for 34% of sales in March, up from both 32% in February and 33% in March 2019. NAR’s 2019 Profile of Home Buyers and Sellers – released in late 20194 – revealed that the annual share of first-time buyers was 33%.
“Despite the social distancing restrictions, with many Realtors® conducting virtual open home tours and with mortgage rates on the decline, a number of first-time buyers were still able to purchase housing last month,” Yun said in the news release.
Individual investors or second-home buyers, who account for many cash sales, purchased 13% of homes in March, down from both 17% in February and 18% in March 2019. All-cash sales accounted for 19% of transactions in March, down from both 20% in February and 21% in March 2019.
Distressed sales5 – foreclosures and short sales – represented 3% of sales in March, up from 2% in February, and unchanged from 3% in March 2019.
Hot Metro Properties
Realtor.com’s Market Hotness Index, measuring time-on-the-market data and listing views per property, revealed that the hottest metro areas in March were Colorado Springs, Colo.; Modesto, Calif.; Manchester-Nashua, N.H.; Rochester, N.Y.; and Lafayette-West Lafayette, Ind.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.45% in March, down from 3.47% in February. The average commitment rate across all of 2019 was 3.94%, the news release said.
Single-family and Condo/Co-op Sales
Single-family home sales sat at a seasonally-adjusted annual rate of 4.74 million in March, down from 5.16 million in February, and up 1.3% from a year ago. The median existing single-family home price was $282,500 in March, up 8.0% from March 2019.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 530,000 units in March, down 11.7% from February and down 3.6% from a year ago. The median existing condo price was $263,400 in March, an increase of 7.9% from a year ago.
Compared to the month prior, March sales decreased in every region, while the Midwest and the South experienced increases in year-over-year sales. Median home prices in all regions increased from one year ago, with the Northeast and Midwest regions showing the strongest price gains.
March 2020 existing-home sales in the Northeast fell 7.1%, recording an annual rate of 650,000, a 3.0% decrease from a year ago. The median price in the Northeast was $300,400, up 8.3% from March 2019.
Existing-home sales decreased 3.1% in the Midwest to an annual rate of 1.25 million, up 4.2% from a year ago. The median price in the Midwest was $219,700, a 9.7% increase from March 2019.
Existing-home sales in the South dropped 9.1% to an annual rate of 2.29 million in March, up 0.9% from the same time one year ago. The median price in the South was $245,100, a 7.5% increase from a year ago.
Existing-home sales in the West fell 13.6% to an annual rate of 1.08 million in March, a 0.9% decline from a year ago. The median price in the West was $420,600, up 8.0% from March 2019.
1 Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90% of total home sales, are based on a much larger data sample – about 40% of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
2 The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.
3 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90% of transactions and condos were measured only on a quarterly basis).
4 Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.
5 Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors Confidence Index.