Existing home sales increase as prices rise slightly

March was a "decent" month for existing home sales according to the National Association of Realtors which reports a 3.7% gain to a slightly higher-than-expected annual rate of 5.1 MM. Prices firmed slightly, up 2.2% for the median reading to $159,600. Yet year-on-year, contraction of 5.9% is a little deeper than 5.2% in the prior month. Slightly more homes were on the market, 3.549 MM, but the solid rise in sales brought down the supply reading slightly to a still very heavy 8.4 months.
The report warns that credit standards are still too tight, reflected in a record all-cash sales rate of 35 percent in the month. Distressed sales made up 40 percent of all sales for the highest rate in nearly two years. The housing market may be lifting slightly but is still near the bottom. Data on new home sales will be posted on Monday. Via NAR:
Sales of existing-home sales rose in March, continuing an uneven recovery that began after sales bottomed last July, according to the National Association of Realtors.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 3.7 percent to a seasonally adjusted annual rate of 5.10 million in March from an upwardly revised 4.92 million in February, but are 6.3 percent below the 5.44 million pace in March 2010. Sales were at elevated levels from March through June of 2010 in response to the home buyer tax credit.

Lawrence Yun, NAR chief economist, expects the improving sales pattern to continue. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain – primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”

NAR’s housing affordability index shows the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13 percent of gross household income, the lowest since records began in 1970.

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