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Existing Home Sales: Further Slowdown As Rates Rose

April 20, 2022
Bottom Line: Existing home sales fell in March, and February sales proved even lower than previously reported as mortgage rates rose sharply in the latter half of the 1st Quarter. While historically still low, inventories rose nearly 12% on the month with "months' supply" approaching two months, still below the five- and 10-year averages of 3.1 and 3.9 months, respectively. Nonetheless, the sales pace remains better than expected, given the sharp move higher in mortgage rates. 30% of buyers were first-timers, suggesting they are trying to lock in monthly payments even at today's mortgage rates, fearing higher rates to come. Homes continue to sell extremely fast, with the average home on the market for just 17 days and 87% of homes selling within a month. Overall, existing home sales have likely peaked until mortgage rates drop again, but so far, the level of activity remains historically robust amid tight supply conditions.
Existing Home Sales FELL by 2.7% in March to 5.77 million, compared with market expectations for a decline to 5.77 million. The prior month was revised down from 6.50 to 5.93 million.  Home re-sales are now 4.5% BELOW their year-ago level.

The Inventory of Homes Available for Sale R
OSE by 11.8% to 950k but are still 9.5% BELOW  their year-ago level. Because inventories increased while sales declined, the Months Supply ROSE to 2.0 months from 1.7 months.  This is still well BELOW the 6-month level that is considered 'normal'.
Home Prices
ROSE compared to their year-ago levels. Average home prices are 9.6% ABOVE their year-ago levels while median home prices are 15.0% ABOVE their year-ago levels.
Article by Contingent Macro Advisors