Existing home sales in the United States declined 3.6% over the month to an annualized rate of 3.98 million units in March, below forecasts for 4.07 million. This was a decrease from 4.09 million in February. Overall existing home sales were down 1.0% over the year. Home prices continued to climb, rising 1.4% over the year to a median sales price of $408,800, the 33rd consecutive month of price increases. Housing inventory rose to a 4.1 months’ supply, up from February and up from 4.0 months a year ago.
The ABA Office of the Chief Economist sees the decline in existing home sales as driven by continued affordability concerns. The average 30-year mortgage rate was 6.38% in the week ending March 26, up 38 basis points since the beginning of the month. While the spring selling season typically brings a pickup in home sales activity, higher mortgage rates are increasing friction in terms of housing supply and reducing affordability on the demand side. Higher rates will also dampen the recent resurgence in refinancing activity and make it more difficult for banks to originate mortgages.
