Sales of existing homes and condominiums rose by 1 percent in March to the third-highest sales pace on record while the nationwide median price jumped by the largest amount in more than 14 years, a real estate trade group reported Monday.
The National Association of Realtors reported that existing home sales rose to a seasonally adjusted annual rate of 6.89 million units last month, up from a February sales pace of 6.82 million units.
The increase was far above the tiny 0.1 percent gain that economists had been expecting, indicating that the modest increase in mortgage rates so far this year has not put a damper on home sales.
The median price for a home sold in March rose to $195,000, a gain of 11.4 percent from the sales price a year ago. That was the biggest year-over-year gain since December 1980, a period when surging inflation was pushing home prices upward.
It marked the third consecutive monthly double-digit gain in prices from a year ago, and industry experts said it indicated in part a lack of available supply to meet demand.
“We’d really like to a bigger supply of homes so people don’t feel pressured when making purchase decisions or contract offers,” said Al Mansell, president of the Realtors group and head of Coldwell Banker Residential Brokerage in Salt Lake City.
While mortgage rates were rising modestly last month, going from 5.69 percent for a 30-year mortgage at the end of February to 6.04 percent at the end of March, they have since slipped back, standing at 5.80 percent last week, according to a nationwide survey by Freddie Mac.
“It appears that it will take much higher rates to dampen the spirits of home buyers,” said Joel Naroff, head of an economic consulting firm in Holland, Pa. “With mortgage rates basically going nowhere and still reasonably low, there is no reason to expect the huge surge in housing sales and prices to slow down sharply.”
The climb in existing home sales helped lift investors’ spirits on Wall Street. The Dow Jones industrial average was up nearly 100 points at midday.
The 1 percent increase in sales followed no change in February and a tiny 0.1 percent increase in January. The seasonally adjusted annual sales rate of 6.89 million units was the third-highest on record, trailing only a 7.02 million pace of home sales last June and a 6.98 million sales pace last November.
The 1 percent increase stemmed from a 1.2 percent gain in sales of single-family homes, which rose to an annual rate of 6.04 million units. Sales of condominiums and co-ops edged down a slight 0.1 percent to 845,000 units in March.
Industry officials said the strong sales rate in March put the housing industry in a good position as it entered the spring home-buying season.
“I expect good numbers in April and May,” said David Lereah, chief economist for the Realtors. “This tells us we have a very healthy housing environment for the spring.”
The increase in existing home sales came after a report last week that construction on new homes and apartments fell by a sharp 17.6 percent in March, the biggest decline in 14 years.
However, Lereah said construction activity is very volatile, reflecting such factors as weather conditions from month to month. He said the decline in construction was giving a false signal about housing strength.
Sales of existing homes and condominiums in March were up 2 percent in the Midwest, 1.9 percent in the West, 0.4 percent in the South and were unchanged in the Northeast, the Realtors reported.