Sales of existing homes of all types increased 3.7% to a seasonally adjusted annual rate of 5.10 million in March from an upwardly revised 4.92 million in February but remain 6.3% below the pace of March 2010, the National Association of Realtors reported Wednesday.
Wall Street was expecting sales to come in at 5 million. The better-than-expected report buoyed builder stocks, as well as the rest of the markets, which shot up sharply shortly after the Realtor report was released.
Single-family home sales rose 4.0% to a seasonally adjusted annual rate of4.45 million in March from 4.28 million in February, 6.5% below the 4.76 million level of March a year prior. Condo and coop sales were up 1.6% to a pace of 650,000, 4.1% behind last year's rate.
Total housing inventory at the end of March rose 1.5% to 3.55 million existing homes available for sale, an 8.4-month supply, roughly flat with February at the current sales pace.
Distressed properties, which made up an estimated 40% of all sales, continued to drag down prices, with the national price down 5.9% to $159,600, the single-family price down 5.3% to $160,500 and the condo/coop price off 10.1% to $153,100, all compared to March, 2010. The average distressed property sold at a 20% discount to market.
"Existing-home sales have risen in six of the past eight months, so we¹re clearly on a recovery path," said Lawrence Yun, NAR chief economist. "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."
NAR said data from Freddie Mac and Fannie Mae show the average credit score rising to about 760 in the current market from nearly 720 in 2007; for FHA loans the average credit score is around 700, up from just over 630 in 2007.
"Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago before the loose lending practices that created the unprecedented boom and bust cycle," Yun said. "We believe low-downpayment loans should continue to be available for those consumers who have demonstrated financial responsibility and are willing to stay well within their budget."
The Realtors said first-time buyers purchased 33% of homes in March, down from 34% in February and 44% in March 2010. All-cash sales hit a new record of 35% in March, up from 33% in February and 27% in March 2010. Investors comprised 22% of the market, up from 19% a year earlier.
Regionally, existing-home sales in the Northeast rose 3.9% to pace of 800,000, 12.1 percent below March 2010, with the median price down 3% to $232,900. The Midwest rose 1.0% to a pace of 1.06 million, 13.1% lower than a year ago, with the median price down 7.1% to $126,100. The South was up 8.2% to an annual level of 1.99 million, 1% below March 2010, with the median price down 6.6% to $138,200. The West was off 0.8% to 1.25 million, 3.1% below a year earlier; the median price in the West was down 11.2% to $192,100.
Wells Fargo home-building analyst Adam Rudiger echoed the Realtors' angst over lending standards in his research alert on the data. "Distressed transactions represented 40% of all sales in March, which is the highest contribution to total existing sales in almost two years, while all-cash buyers comprised 35% of all transactions--an all-time high since the NAR began reporting this metric in late 2008," he wrote. "We believe the growth in these metrics is reflective of an stubbornly difficult lending environment. Freddie Mac and Fannie Mae recently reported average credit scores of approximately 760 (versus 720 in 2007) and FHA average credit score are hovering near 700 (up from 630 in 2007). We believe these tighter lending standards will continue to limit the growth in both new and existing home sales in 2011 and 2012."