The U.S. housing market softened in March. More homes went listed for sale, and fewer sales completed. The shift is good news for today's U.S. home buyers who currently benefit from extra-low mortgage rates.
Although home prices continue to climb, low rates plus the availability of low-downpayment mortgage programs make today an excellent time to consider buying a home.
Analysts expect demand for homes to increase into summer.
According to the National Association of REALTORS® (NAR), existing homes sold on a seasonally-adjusted, annualized basis fell to 4.59 million in March.
An "existing home" is a home which cannot be considered new construction, is residential, and which is comprised of one-to-four units. Single-family residences, town homes, and condos and co-ops are counted toward the Existing Home Sales tally.
The March reading is the third straight month in which home sales declined and annualized sales are now down eight percent from the period one year ago. The adjusted-4.59 million units sold marks the lowest annualized sales volume since July 2012.
For today's buyers, though, the downturn is an opportunity.
According to Fannie Mae's monthly National Housing Survey, 38% of home sellers believe that now is "a good time to sell", up four ticks from the month prior. Sellers sense that the market has slowed, leaving many eager to sell their homes quickly.
Their concerns may be misplaced, however.
First, the median number of Days on Market for homes for sale dropped in March, falling to 55 days. This is the fastest pace since October of last year and 12% faster as compared to one year ago.
Second, home supply remains scarce in many U.S. markets.
There were fewer than two million homes for sale nationwide at the end of March. At the current pace of sales, it would take 5.2 months for these homes to sell-out completely.
When home supply is less than 6.0 months, it suggests that sellers have negotiation leverage over buyers. Despite rising for a third straight month, then, the current Existing Home Supply shows sellers in control. Yet, sellers don't feel in control.
At times like this, buyers can find great values.
In addition to showing the fewest homes sold on an annualized basis in twenty-one months, the March 2014 Existing Home Sales report included interesting data about the make-up of today's typical buyer and statistics about their home loans.
For example, the report showed the average home selling for 8% more as compared to the year prior, plus all of the following :
Most notable, though, is that Days on Market fell sharply.
After peaking in December, the typical time required to sell a home dropped another seven days to 55 days, on average. Furthermore, 37% of all homes sold in fewer than 30 days -- a three-percentage point increase over the month prior.
Decreasing Days on Market may suggest that a markedly stronger spring housing market as compared to the winter months.
For buyers, the window to buy homes cheaply may be closing.
For today's home buyers -- from Portland, Maine to Portland, Oregon -- the housing market narrative is the same. Home supply remains tight; home prices continue to escalate; and mortgage rates are still highly affordable.
If you plan to buy a home later in 2014, or in 2015, be wary of changing conditions. Plan a budget and know how much home you can afford. Use today's mortgage rates to assure an accurate forecast.
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The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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