Apr 21, 2023 - Economy

Homebuying activity slows as "For sale" signs dwindle

U.S. existing home sales
Data: FactSet, National Association of Realtors; Note: Includes single-family homes, townhomes, condos and co-ops; Chart: Alice Feng/Axios

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.

Go deeper