WASHINGTON (AP) — U.S. homebuyers flooded back into the real estate market in March, pushing up sales and prices at the start of the spring buying season.
Sales of existing homes jumped 6.1 percent last month to a seasonally adjusted annual rate of 5.19 million, the National Association of Realtors said Wednesday.
Home purchases recovered after setting a weak pace in January and February, when an extremely cold and snow-filled winter cut into purchases. Relatively low mortgage rates and robust hiring has raised expectations that sales will improve after slipping slightly in 2014.
But the surge in sales has yet to cause a meaningful increase in listings. The market has just 4.6 months of supply, compared to six months in what economists consider to be a healthy market. The limited supplies have caused prices to rise at a level that hurts affordability. Median home prices increased 7.8 percent over the past 12 months to $212,100.
Real estate continues to recover from a housing crash that triggered the 2008 financial crisis and dragged down prices through 2012. But the sluggish pace of the nearly six-year recovery has kept wages from rising significantly, which has put homes out of reach for many as prices head higher. Many potential sellers are still underwater on their mortgages, meaning that they owe more than their home could fetch in a sale. This restricts the number of listings.
The March sales rate topped 5 million for the first time this year — and suggests that sales should improve from the total of 4.94 million in 2014. Still, in a healthy market, sales would average roughly 5.5 million a year, economists say.
Home-buying improved in all four geographic regions last month. The largest gains came from the Northeast and Midwest, areas where fierce winter weather in the prior two months delayed sales.
First-time buyers are also creeping back into the market. They accounted for 30 percent of March purchases, up from 29 percent in February. Yet first-time buyers usually compose 40 percent of sales in a healthy market.
The sales figures reinforce several other indicators that suggest a strengthening housing sector.
The real estate brokerage Redfin reported last week that sales jumped 10.1 percent in March compared with 12 months earlier. That's close to the 10.4 year-over-year increase tracked by the Realtors.
Redfin also found that the majority of homes in San Francisco sold for more than $1 million last month, while Denver homes were staying on the market for just six days. Yet fewer homes nationwide were listed for sale in March versus last year, likely limiting sales growth and lifting prices higher.
Prices are climbing at roughly four times the pace of wage growth. Average hourly wages have risen only 2.1 percent over the past year, meaning that.
Still, job gains over the past year mean that there are an additional 3.1 million people working — who have paychecks to spend. This has increased confidence within the real estate sector of a sales surge this year. Economists are predicting that home sales will increase.
Relatively low mortgage rates should also help buyers.
Average 30-year fixed rates were 3.67 percent last week, according to the mortgage giant Freddie Mac. That average has plummeted from a 52-week high of 4.33 percent.