WASHINGTON (4/23/14)--Existing-home sales continue to flounder, as levels in March fell to 4.59 million annualized units, a 0.2% drop from February. Houses are selling at their slowest pace since June 2012 and sit 7.5% lower than levels last year (Economy.com April 22).
Perhaps contributing to the lull are the healthy gains in housing prices, measured by the Federal Housing Finance Agency, which reported Tuesday a 0.6% jump in February's purchase-only house price index.
While prices are down from mid-2013 levels, prices have climbed 6.9% higher than those seen in February 2013.
Improving credit conditions--thanks to the higher credit scores of mortgage borrowers--and a tight supply of housing are driving the strong growth in housing prices, Moody's analysts said.
Analysts also said that while supply conditions are tight, they also appear to be loosening, with home inventories increasing by 4% in March, a trend that could re-energize the sluggish home-sale numbers.
"The best that can be said of the March existing-home sales report is that sales were flat after a six-month streak of weakness," said Celia Chen, Moody's analyst.
Piling on to the unimpressive housing sales data, meanwhile, Fannie Mae and Freddie Mac economists decided this week to reconsider their expectations for the housing market in 2014. Fannie Mae cut down its new-home construction outlook, and Freddie Mac darkened its forecast on home sales (MarketWatch April 22).
There could be hope for homebuyers, however. Despite the rise in housing prices, MarketWatch reported mortgage rates have been declining in recent weeks and remain relatively low, which could leave open the door later this year for a rebound in sales.
Median home prices came in at $198,500 in March, a 7.9% jump year-over-year.