US existing Home Sales fell in March

The US housing market has seen a decline in existing-home sales during March, according to data released by the National Association of Realtors (NAR).

The US housing market has seen a decline in existing-home sales during March, according to data released by the National Association of Realtors (NAR). Home sales fell 2.4% in March to 4.44 million units, significantly below the forecast of 4.5 million units by economists polled by Reuters. Compared to the same period last year, existing-home sales fell by 22% in March. The median existing home price also saw a year-on-year decline by 0.9% to $375,700, representing the largest drop since January 2012. However, a survey conducted by Wells Fargo housing market index indicates the US housing market is nearing the bottom after the index rose to a seven-month high in April. Additionally, figures from the Government report also support this claim, showing that the number of single-family houses built increased in March for the second consecutive month, with future construction permits also seeing a sharp increase.

At March's sales pace, US existing housing supply still lies 4-7 months away from the equilibrium between supply and demand of the housing market. Despite the drop in March's sales, the US housing market may be headed towards stabilisation. The drop in the number of contracts signed in February, when mortgage rates begun to rise again after falling in January, could be attributed to the decline in March sales. Nonetheless, the rebound of the Wells Fargo housing market index and recent government figures suggest that the decline in the US housing market may be coming to an end.

The data, therefore, indicates that the US housing market may soon reach a period of stabilisation after a period of low sales and decreasing prices. While the March sales were lower than expected, the increase in housing supply – with the number of pre-owned homes in the market rising by 5.4% compared to the previous year – may provide more options for potential home buyers, and this, coupled with the rise in the housing market index suggests a more stable housing market.