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WASHINGTON: US home resales volumes bounced back in March, a hopeful sign for recovery in the housing market, but prices continued to decline. The wave of foreclosed properties is keeping supply up but prices down.
Existing home sales in March rose 3.7% from February to an annual rate of 5.1 million units, the National Association of Realtors said. Economists had expected a smaller increase to a five million-unit pace. But the median home price fell 5.9% in March from a year earlier to US$159,600 (RM478,800).
"The underlying trend for existing home sales is improving, but only at a gradual pace," said Michael Gapen, an economist at Barclays Capital in New York. "Demand should gradually firm as labour market conditions continue to improve."
With US unemployment beginning to fall and significant job growth seen in February and March, economists are cautiously optimistic home sales will continue to rise as the year progresses.
Analysts also cited a jump last week in demand for home loans as boding well for the housing recovery. The Mortgage Bankers Association said its purchase loan index rose 10% to its highest since early December.
"The housing market in terms of demand has bottomed. We have some reason for modest optimism as we go through 2011," said Peter Muoio, a senior principal at real estate research firm Maximus Advisors in New York.
But the huge number of foreclosed properties on the market has some economists feeling less optimistic. Foreclosures and "short" sales made up 40% of transactions last month — the highest since April 2009 and up from 39% in February.
"While the higher share of distressed properties is encouraging in that it should help to clear the market sooner of the glut of foreclosures already listed, it will, of course, prevent a sustained recovery in prices for some time," said Omair Sharif, an economist at RBS in Stamford Connecticut.
"All-cash purchases made up a record 35% of sales in March, which some economists said could be a sign some investors were starting to seek a hedge against inflation.
"It is probably way too early to realistically connect the dots from cash sales to inflation expectations as opposed to simple bargain hunting," said Steve Blitz, senior economist at ITG Investment Research in New York.
Home sales in March rose across the board. Purchases of multifamily dwellings rose 1.6% and single-family home sales advanced 4%.
At March's sales pace, the supply of existing homes on the market slipped to 8.4 months' worth from 8.5 in February. A supply of between six and seven months is generally considered ideal, with higher readings pointing to lower prices. The number of previously owned homes on the market rose 1.5% to 3.55 million — well above the economy's natural rate of between 2 million and 2.5 million. — Reuters
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