Homebuying activity slows as "For sale" signs dwindle
The spring homebuying season got off to a piddling start in March.
Why it matters: The mismatch between housing supply and demand — and the surging prices that resulted — is a lingering side effect of the COVID crisis on the economy.
Driving the news: Sales of existing homes, the vast majority of the houses sold in the U.S., dropped 2.4% in March, compared to the prior month, according to the National Association of Realtors.
- The number of homes sold dove 22% from March of last year.
- Meanwhile, the median sale price of a house was nearly $376,000 — that's inched down by about 1% compared with a year ago, but it's still nearly 40% higher than at the end of 2019, just before the pandemic
The big picture: It's hard to buy a house if there aren't many available. And there aren't.
- With just 2.6 months' worth of existing homes for sale, inventory remains near some of the lowest levels on record.
- The high cost of taking out a new mortgage has kept many homeowners from selling the homes that they previously financed at rock-bottom rates. (These high rates are also keeping some first-time buyers on the sidelines.)
What they're saying: "What still hasn't changed is the amount of existing home inventory out there. That remains very limited," Jessica Hansen, VP of investor relations at homebuilder D.R. Horton, said on a Thursday earnings call.
- Turns out that's great for builders: D.R. Horton's Q1 profits were much better than analysts expected, helping to send its shares up nearly 6% on Thursday.
- If homebuyers are set on getting a house, "new construction is where they can find it right now," Hansen said.