Existing home sales rebounded following February’s big drop, climbing a modest 3.7% to a seasonally adjusted annual rate of 5.10 million in March, besting the forecast offered by Bloomberg of 5.0 million units.
The total inventory of houses remains bloated, rising 1.5% to 3.55 million existing homes available for sale, which represents an 8.4-month supply at the current sales pace, versus 8.5-months in February.
Lawrence Yun, NAR chief economist, said, “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path.
“With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain – primarily because some buyers are finding it too difficult to obtain a mortgage.”
He added that sales would be “notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago – before the loose lending practices that created the unprecedented boom and bust cycle.”
His remarks have merit but I take some issue with his comment that we are "clearly on a recovery path," as stiff headwinds that are still in place following the housing market bust continue to hamper the market, including lackluster consumer confidence in the recovery and still high unemployment.
Despite the modest rise in March, home sales have not moved beyond depressed levels, an overhang of excess supply is still holding down prices, and the monthly increases in sales that Yun referred to are coming off extremely depressed levels that followed the expiration of the housing tax credit.
More realistic lending standards would likely aid the market, but potential buyers will probably remain on the sidelines until they are convinced the slide in housing prices is past and hiring accelerates.
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