The headline existing home sales declined relative to last month with the NAR stating "Consumers are facing much higher home prices, rising mortgage rates, and falling affordability, however, buyers are still actively in the market".

Analyst Opinion of Existing Home Sales

We are now in the "pandemic normal" - and it seems home sales are on a solid growth footing but note that inventory levels are extremely low limiting how many properties can be sold.

We consider this report better than last month, and the rate of growth is decelerating.

Econintersect Analysis

• The unadjusted sales rate of growth accelerated 7.1 % month-over-month, up 16.3 % year-over-year - sales growth rate trend slowed using the 3-month moving average.
• The unadjusted price rate of growth accelerated by 0.5 % month-over-month, up 12.4 % year-over-year
• The homes for sale unadjusted inventory accelerated 1.3 % this month compared to last month and is down 28.2 % year-over-year

NAR reported:

• Sales down 3.7 % month-over-month, up 12.3 % year-over-year (reported last month +9.1 % year-over-year)
• Median prices up 17.2 % year-over-year
• The market (from Econoday) expected an existing home sales level of 5.850 M to 6.670 M (consensus 6.205 M) with a reported value of 6.01 million

The graph below presents the unadjusted home sales volumes comparing growth in every month.

Here are the headline words from Lawrence Yun, NAR's chief economist:

Consumers are facing much higher home prices, rising mortgage rates, and falling affordability, however, buyers are still actively in the market.

The sales for March would have been measurably higher, had there been more inventory. Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.

Although mortgage rates have risen a tick, they are still at a favorable level and the economic outlook is promising.

At least half of the adult population has received a COVID-19 vaccination, according to reports, and recent housing starts and job creation data show encouraging dynamics of more supply and strong demand in the housing sector.

Without an increase in supply, the society wealth division will widen with homeowners enjoying sizable equity gains while renters will struggle to become homeowners,

To remove the seasonality of home prices, here is a year-over-year graph that demonstrates a general improving home price rate of growth.

Econintersect does a more complete analysis of home prices with the Case-Shiller analysis.

The home price situation according to the NAR:

The median existing-home price for all housing types in March was $329,100, up 17.2% from March 2020 ($280,700), as prices increased in every region. March's national price jump marks 109 straight months of year-over-year gains.

According to the NAR;

First-time buyers were responsible for 32% of sales in March, up from 31% in February and down from 34% in March 2020. NAR's 2020 Profile of Home Buyers and Sellers - released in late 20204 - revealed that the annual share of first-time buyers was 31%.

Individual investors or second-home buyers, who account for many cash sales, purchased 15% of homes in March, down from 17% in February and up from 13% in March 2020. All-cash sales accounted for 23% of transactions in March, up from both 22% in February and from 19% in March 2020.

Distressed sales - foreclosures and short sales - represented less than 1% of sales in March, equal to February's percentage but down from 3% in March 2020.

Unadjusted Inventories are below the levels of one year ago.

Total housing inventory at the end of March amounted to 1.07 million units, up 3.9% from February's inventory and down 28.2% from one year ago (1.49 million). Unsold inventory sits at a 2.1-month supply at the current sales pace, marginally up from February's 2.0-month supply and down from the 3.3-month supply recorded in March 2020. Inventory numbers continue to represent near-historic lows; NAR first began tracking the single-family home supply in 1982.

Caveats on Use of NAR Existing Home Sales Data

The National Association of Realtors (NAR) is a trade organization. Their analysis tends to understate the bad and overstate the good. However, the raw (and unadjusted) data is released which allows a completely unbiased analysis. Econintersect analyzes using the raw data. Also, note the National Association of Realtors (NAR) new methodology has a moderate back revision to the data - so it is best to look at trends, and not get too excited about each month's release.

Econintersect determines the month-over-month change by subtracting the current month's year-over-year change from the previous month's year-over-year change. This is the best of the bad options available to determine month-over-month trends - as the preferred methodology would be to use multi-year data (but the New Normal effects and the Great Recession distort historical data).