March comes with the feeling of rebirth in the air and more people are deciding to make a drastic change. This could also imply a change of address. However, this March was different from the others. Existing home sales skyrocketed with a lot above what analysts forecasted for this period of time. This phenomenon is more surprising as the housing market is currently seized with high prices and short supply.
This Spring Buying Season Started with 5.71 Million Existing Home Sales
On Friday, the National Association of Realtors released its monthly report on the existing home sales. The paper revealed the number and price tags of previously owned U.S. houses over the month of March. The findings of the report were surprising. This spring buying season started with an astonishing boom that not only analysts were able to foresee.
As a consequence, last month the sales rose 4.4% to an annual rate of 5.71 million properties. These figures marked the highest sales rate in this branch of real estate since February 2007. However, a controversial fact is already describing this rapidly growing industry. While the national economy enjoyed a prosperous and steady period which promoted a large wave of would-be buyers, there are few listings. The availability of existing homes started to fade away slowly. As a consequence, price tags matched this unbalance with high values. Unfortunately, they are rising faster than salaries.
The Demand and Supply Relationship Is Unbalanced
As a consequence, the present market displays listings for fewer days than before. Nonetheless, this feature promotes the convenience of interested buyers that know what they want and act quickly. The smaller number of available existing homes can be interpreted as another consequence of the burst of the housing bubble that happened approximately ten years ago.
Those homes that were previously refused by the demand ended up eventually in the hands of investors. In their turn, they changed these properties into rentals that are generating a constant revenue. On the other hand, this strategy contributed heavily to a shortage of supply. This alone can explain why there is an unbalanced relationship between demand and supply. Realtors found that over the past year, interested buyers rose 5.9%. At the same time, available properties fell 6.6% to only 1.83 million locations.
As a consequence, prices in March climbed 6.8% to $236,400 which is more than the wage growth was able to keep up with. Moreover, while last year the average time of a sale was 47 days, last month it took buyers 34 days to complete their purchase.
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