The headline existing home sales growth "improved" with the authors saying sales "closings in March eked forward despite challenging market conditions in most of the country". Our analysis shows there was no improvement - and the fact was that home sales drifted into contraction year-over-year.

Analyst Opinion of Existing Home Sales

The rolling averages have been slowing since the beginning of 2017, and they continued decelerating this month. The rolling averages drifted deeper into contraction. Housing inventory is now at historical lows for Marchs - and if you do not have enough houses for sale - then that means home sales cannot improve.

Econintersect Analysis

• Unadjusted sales rate of growth decelerated 5.9 % month-over-month, down 4.6 % year-over-year - sales growth rate trend slowed using the 3 month moving average.
• Unadjusted price rate of growth was unchanged month-over-month, up 4.1 % year-over-year - price growth rate trend marginally slowed using the 3 month moving average.
• The homes for sale unadjusted inventory improved this month compared to last month, but remains historically low for Marchs, and is down 8.1 % from inventory levels one year ago).

NAR reported:

• Sales up 1.1 % month-over-month, down 1.2 % year-over-year.
• Prices up 5.8 % year-over-year
• The market expected annualized sales volumes of 5.390 M to 5.800 M (consensus 5.528 million) vs the 5.60 million reported.

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The graph below presents unadjusted home sales volumes.

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Here are the headline words from the NAR analysts:

Lawrence Yun, NAR chief economist, says closings in March eked forward despite challenging market conditions in most of the country. "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 5.72 million," said Yun. "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."

"Although the strong job market and recent tax cuts are boosting the incomes of many households, speedy price growth is squeezing overall affordability in several markets - especially those out West," said Yun.

"Realtors® throughout the country are seeing the seasonal ramp-up in buyer demand this spring but without the commensurate increase in new listings coming onto the market," said Yun. "As a result, competition is swift and homes are going under contract in roughly a month, which is four days faster than last year and a remarkable 17 days faster than March 2016."

NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, says the extremely tight inventory in the entry-level segment of the market should greatly benefit homeowners looking to trade up this spring. "First-time buyers continue to make up an underperforming share of the market because there are simply not enough homes for sale in their price range," she said. "Supply conditions improve in higher up price brackets, which means those trading up should see considerable interest in their home, as well as more listings to choose from during their own search."

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To remove the seasonality in home prices, here is a year-over-year graph which demonstrates a general improvement in home price rate of growth since mid-2012 - however a slowing growth trend is developing.

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Econintersect does a more complete analysis of home prices with the Case-Shiller analysis.

The home price situation according to the NAR:

The median existing-home price2 for all housing types in March was $250,400, up 5.8 percent from March 2017 ($236,600). March's price increase marks the 73rd straight month of year-over-year gains.

According to the NAR;

First-time buyers were 30 percent of sales in March, which is up from 29 percent last month but down from 32 percent a year ago. NAR's 2017 Profile of Home Buyers and Sellers - released in late 20174 - revealed that the annual share of first-time buyers was 34 percent.

All-cash sales were 20 percent of transactions in March, which is down from 24 percent in February and 23 percent a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in March, which is unchanged from February and down from 18 percent a year ago.

Unadjusted Inventories are below the levels of one year ago.

Total housing inventory3 at the end of March climbed 5.7 percent to 1.67 million existing homes available for sale, but is still 7.2 percent lower than a year ago (1.80 million) and has fallen year-over-year for 34 consecutive months. Unsold inventory is at a 3.6-month supply at the current sales pace (3.8 months a year ago).

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Caveats on Use of NAR Existing Home Sales Data

The National Association of Realtors (NAR) is a trade organization. Their analysis tends to understate the bad, and overstate the good. However, the raw (and unadjusted) data is released which allows a complete unbiased analysis. Econintersect analyzes using the raw data. Also note the National Association of Realtors (NAR) new methodology now has moderate back revision to the data - so it is best to look at trends, and not get too excited about each month's release.

Econintersect determines the month-over-month change by subtracting the current month's year-over-year change from the previous month's year-over-year change. This is the best of the bad options available to determine month-over-month trends - as the preferred methodology would be to use multi-year data (but the New Normal effects and the Great Recession distort historical data).