US existing home sales rise more than expected in March

Sales of US existing homes rose more than expected in March, according to data from the National Association of Realtors.

Sales were up 1.1 % to a seasonally-adjusted annual rate of 5.60m from 5.54m in February. Economists had been expecting a rate of 5.55m. Despite the increase, sales were still down 1.2% compared to a year ago.

Meanwhile, the median price of an existing home was $250,400, up 5.8% from March 2017 and marking the 73rd straight month of year-over-year gains.

Total housing inventory at the of March was up 5.7% to 1.67m existing home sales available for sale, but was still 7.2% lower than a year ago and down year-over-year for 34 consecutive months.

Existing home sales in the Northeast rose 6.3% to an annual rate of 680,000, while sales in the Midwest were 5.7% higher at 1.29m. In the South, sales were down 0.4% to 2.40m and in the West, existing home sales were down 3.1% to an annual rate of 1.23m.

Lawrence Yun, NAR chief economist, said: "Robust gains last month in the Northeast and Midwest - a reversal from the weather-impacted declines seen in February - helped overall sales activity rise to its strongest pace since last November at 5.72m.

"The unwelcoming news is that while the healthy economy is generating sustained interest in buying a home this spring, sales are lagging year ago levels because supply is woefully low and home prices keep climbing above what some would-be buyers can afford."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the data is "a pleasant, if modest, surprise".

"The pending sales index pointed to a dip in sales, but the reported number is a four-month high. Sales of both single-family homes and condos/co-ops rose slightly but remain a bit short of last year's cycle peaks. Sales continued to run marginally below the pace implied by the lagged mortgage applications numbers, so we expect numbers close to 5.7m over the next few months, but we see no sign that activity will be sustained above that level.

"Mortgage applications have been flat, net, since late last year. Supply remains very low, and is still falling on a y/y basis, as is the length of time taken to sell a home, now just 30 days, compared to 34 in March last year and 47 in March 2016. As a result single-family home prices are rising by nearly 6% y/y, so implied real mortgage rates are still negative, despite the rise in nominal rates since September."