Sales of existing homes declined by 2.4% during March, the largest monthly decline for existing home sales since 2012. This brings the overall number of existing home sales down by 22% compared to the same time last year. This is potentially a sign of instability in the housing market, which continues to be troubled by high interest rates and limited available inventory.
Housing Sales Fall in March
The number of existing home sales fell by 2.4% in March compared to the previous month, according to the National Association of Realtors. This caused the national median sale price to fall from $400,000 to $375,700 between February and March, a 22% drop from the same time the previous year. This continues a trend in home prices that has been steadily declining over the past year, although there was a slight uptick in February.
Low Inventory, High Interest Rates
The cause of this drop in existing home sales is attributed to two primary factors. First, sky high interest rates have helped to suppress home sales, with interest rates increasing to 6.42% for 30-year fixed rate mortgages with conforming loan balances by the end of March. At the same time, there are few homes actually on the market compared to the number of potential buyers, which has begun to hurt demand as some people give up on finding affordable homes.
Uncertainty About the Housing Market
These trends have made some worry about the state of the housing market going forward, with the falling number of existing home sales being of particular concern. Mortgage interest rates do not seem like they will decrease anytime soon, and though home builders are optimistic, it may be months before they begin to catch up with demand. As a result, buyers seem to be wary about putting their money down for a mortgage that they may wind up overpaying for.
How This Could Affect You
If you are looking to sell a house, you may struggle more than you would think to find a buyer, due to high mortgage interest rates. That being said, it is considered a seller’s market, due to a lack of overall inventory that means every house on the market is likely to attract a buyer relatively soon. As a buyer, however, the market is potentially difficult, since you will be competing for a relatively small number of homes, which can mean you will need to bid higher than you may want to secure a purchase of a home.
If you are an attorney assisting a client with a real estate transaction, you should contact the title insurers at Habitat Abstract. Our experienced staff will assist you with obtaining a title insurance policy that protects your clients and prevents unforeseen issues related to a defective title. Contact us at 1-888-99-TITLE (1-888-998-4853) or visit our contact page for more information.
