Housing Market Gets Bad News

Home sales suffered a big drop last month, which is bad news for the U.S. housing market's busiest time of the year, a Moody's expert told Newsweek.

Existing-home sales slid 4.3 percent last month from February to a seasonally adjusted annual rate of 4.19 million, down 3.7 percent compared to a year before, according to a National Association of Realtors (NAR) report.

At the same time, the median existing-home sale price rose 4.8 percent to $393,500 from March 2023 to March 2024—the highest price ever for the month of March and the ninth consecutive month of year-over-year gains.

"Extremely low housing affordability and a lean existing sales inventory will keep a lid on existing-home sales in the coming months," Matthew Walsh, Moody's Analytics housing economist, told Newsweek.

"Sales remain well below their average over the past decade, and forward-looking indicators are downbeat. The National Association of Realtors' pending home sales index had an uneven showing to start the year, and is averaging near its record low. Similarly, mortgage purchase applications have moved sideways over the last few weeks."

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NAR's report Thursday shows that sales fell across the Midwest (-1.9 percent), South (-5.9 percent) and the West (-8.2 percent) month-over-month, but rose in the Northeast (+4.2 percent) for the first time since November 2023. Compared to a year before, sales decreased in all four of the U.S. major regions last month.

"Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves," NAR Chief Economist Lawrence Yun said in a written statement accompanying the report. "There are nearly six million more jobs now compared to pre-COVID highs, which suggests more aspiring home buyers exist in the market."

There are also more homes for sales on the market. The total housing inventory registered at the end of March was 1.11 million units, up 4.7 percent from February and 14.4 percent from one year ago. But despite the new additions to the market, inventory is still historically low across the U.S., contributing to keep prices high—and unaffordable for many.

According to Walsh, the lower existing-home sales in March are consistent with expectations. "The weight of elevated mortgage rates are taking their toll on buyer demand and February's eye-popping increase was unsustainable," he said.

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"On the supply side, a lean inventory of homes for sale is making it difficult for the buyers that remain in the market to find a home," Walsh continued. "March's data show total inventory was up more than 14 percent from a year ago, but even with this increase the market for existing homes remains extremely tight," he added.

At the current pace of sales, Walsh said, "the months' worth of unsold inventory is 3.2, which is up from a month ago, but remains well below the 4 to 6 months that is considered a balanced housing market."