Sales of existing homes are falling because interest rates are keeping buyers out of the picture

Sales of previously owned homes in the U.S. fell from a one-year high in March, underscoring the continued impact of high mortgage rates. increased prices.

The number of contracts fell 4.3% from a month earlier to 4.19 million on an annual basis, according to data from the National Association of Realtors released Thursday. The pace was in line with the average estimate of economists surveyed by Bloomberg.

“Although recovering from the cyclical trough, home sales remain stagnant as interest rates have not made any major moves,” NAR chief economist Lawrence Yun said in a statement.

, which hampers the recent dynamics in the housing market. New home purchases have also cooled as potential buyers sit on the sidelines until financing costs ease.

Other housing data this week showed optimism among builders leveling off and construction starts declining. Mortgage rates remain more than double what they were at the end of 2021, and Federal Reserve Chairman Jerome Powell said Tuesday that the Fed is prepared to maintain rates. higher longer than previously expected to reduce inflation.

The stock of existing homes for sale increased by 14.4% in March compared to the same month last year to 1.11 million. While inventory is still at historic lows, it is on the rise as some homeowners feel they can no longer delay their move.

At the current sales pace, selling all the properties on the market would take 3.2 months, compared to a supply of 2.7 months in March last year. Brokers consider anything under five months of supply indicative of a tight market.

Selling price

The average sales price rose 4.8% from a year ago to $393,500, the highest ever in March.

“More inventory is always welcome in the current environment,” Yun said. “It’s a good time to list ongoing offers on mid-priced homes and overall, home prices continue to rise.”

About 60% of homes sold were on the market for less than a month, and 29% were sold above list price, Yun said on a call with reporters.

The NAR report also found that properties stayed on the market for an average of 33 days in March, up from 38 a month earlier.

Existing home sales make up the majority of U.S. housing sales and are calculated when a contract expires.