Home Sales Jump to Highest Level in 18 Months
Sales of existing homes surged in March to their highest level in 18 months as more houses came on the market, a sign of strength in housing ahead of the spring selling season.
The fairly upbeat report from the National Association of Realtors on Wednesday implied the economy was regaining some momentum after hitting a speed bump at the start of the year.
“It’s consistent with strong growth in the second quarter. We should have a solid spring selling season and should see the housing market continuing to improve through 2015,” said Gus Faucher, senior economist at the PNC Financial Services Group.
Existing-home sales increased 6.1 percent to an annual rate of 5.19 million units in March, the highest level since September 2013. The percentage rise was the largest since December 2010.
The outlook for the spring selling season, which runs from April through August, was also bolstered by a separate report from the Mortgage Bankers Association, which showed applications for loans to purchase homes jumped 5 percent last week to the highest level since June 2013.
It was the fourth time in five weeks that purchase applications rose, and economists attributed this to moves by the government to ease credit conditions for first-time buyers.
Home sales have been constrained by a shortage of properties on the market, which has pushed up home prices and limited choice for potential buyers. Fewer homeowners are defaulting on their mortgages, meaning there are fewer foreclosed properties in the pipeline to lift supply.
As such, builders would have to break more ground to increase inventories. D.R. Horton, the largest homebuilder in the United States, on Wednesday reported a 30 percent jump in orders.
In March, the inventory of unsold homes on the market increased 5.3 percent from a month ago to two million units, the highest level since last November. However, supply was up only 2 percent from a year ago.
Realtors and economists say insufficient equity and uncertainty about the economy’s strength were forcing potential sellers to stay longer in their homes. A recent survey by the Realtors association showed homeowners were staying in their homes for an average of 10 years instead of the typical seven years.