March sales of existing homes exceeded expectations at a seasonally adjusted annual rate of 4.59 million sales according to the NAR. Analysts projected that existing home sales would reach 4.55 million based on February’s reading of 4.50 million sales.
The pace of existing home sales declined by 0.20 percent as compared to February’s reading.
Headwinds Cause Slower Pace Of Home Sales
Analysts cited poor winter weather and rapidly rising home prices as factors that kept buyers away, although the Northeast and Midwest regions reported improvements in home sales in March. NAR said that the national average home price increased to $198,500, which was a year-over-year increase of 7.90 percent.
New mortgage regulations, which have caused mortgage lenders to take a conservative position with their lending policies, are also seen as a discouragement to buyers with less-than-perfect credit, first-time and moderate income home buyers.
Experts expressed concerns that current home prices and tight lending standards could create a shortage of first-time buyers.
Home sales to investors have fallen as higher home prices and fewer distressed (foreclosure and short sale) properties cause deals on cheap homes to dry up.
Fannie And Freddie Revise Construction, Housing Market Forecasts
Fannie Mae reduced its forecast for home construction started in 2014 from 1.55 million to 1.05 million. Doug Duncan, Fannie Mae’s chief economist, said that constraints on credit and labor contributed to the revised forecast.
Freddie Mac reduced its forecast of homes sold in 2014 from 5.60 million to 5.50 million. Frank Nothaft, Freddie Mac’s chief economist, said that tight inventories of homes in some areas could cause significant challenges for home buyers.
FHFA Home Price Index Posts March Gain
FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that February home prices related to mortgages that Fannie and Freddie own or guarantee, gained 0.60 percent as compared to a revised January reading of a 0.40 percent gain.
Year-over-year, home prices rose by 6.90 percent as compared to January’s year over year reading of 7.20 percent.
Analysts said that smaller month-to-month dips in home prices could indicate a turnaround for lagging housing markets and also noted that sales lost during severe winter weather may be recouped as the spring buying season gains momentum.
Last week’s economic reports provided rays of light as compared to the recent slump in positive economic news.