HOME SALES IN MARCH HAD BIGGEST DECLINE IN 16 MONTHS / THE WALL STREET JOURNAL

Home Sales in March Had Biggest Decline in 16 Months

Sales of previously owned homes decreased 4.3% from the prior month

By Nicole Friedman

A persistently low supply of homes for sale is helping push prices higher. PHOTO: DAVID RYDER/BLOOMBERG NEWS

Home sales in March posted their biggest decline in more than a year, reversing course after a positive start this year as rising mortgage rates frightened off buyers.  

Sales of previously owned homes decreased 4.3% from the prior month to a seasonally adjusted annual rate of 4.19 million, the National Association of Realtors said Thursday. 

It was the biggest percentage decline on a monthly basis since November 2022, NAR said. 

After sales tumbled to their lowest level in nearly 30 years in 2023, activity picked up to start this year. 

Home sales rose during the first two months as buyers took advantage of a decline in rates and active listings that ticked higher early in the year. 

But mortgage rates rose again in February. 

That sent buyers to the sidelines and it now threatens to squash momentum during the crucial spring home-buying season, which is typically the busiest time of year in the housing market.

The average rate on a 30-year fixed mortgage has moved back toward 7%, according to Freddie Mac. 

While many economists expect rates to decline later this year, stronger-than-expected inflation data last week could prompt Federal Reserve officials to hold rates at their current level for longer. 

That could also keep mortgage rates from declining.

Home buyers are also confused about upcoming changes to rules about how real-estate agents get paid, and whether those changes could increase or decrease their costs. 

That is causing some home shoppers and sellers to pause until there is more clarity when the new rules go into effect in July. 

“There’s so many mixed signals now in the market that for many people, it’s just too much,” said Selma Hepp, chief economist at CoreLogic. 

“I think they’re just sitting it out.”

While higher mortgage rates make home purchases more expensive for many buyers, a persistently low supply of homes for sale is also pushing prices higher.

The national median existing-home price rose 4.8% in March from a year earlier to $393,500, NAR said. 

“Home sales are essentially stuck,” said Lawrence Yun, NAR’s chief economist. “We need more inventory, definitely.”

On an annual basis, existing home sales fell 3.7% in March. 

These sales make up most of the housing market.