LOS ANGELES (AP) — The spring homebuying season is off to a sluggish start as home shoppers contend with elevated mortgage rates and rising prices.
Sales of previously occupied U.S. homes fell 4.3% in March from the previous month to a seasonally adjusted annual rate of 4.19 million, the National Association of Realtors said Thursday. That's the first monthly decline in sales since December and follows a nearly 10% monthly sales jump in February.
Existing home sales also fell 3.7% compared with March last year. The latest sales still came in slightly higher than the 4.16 million pace economists were expecting, according to FactSet.
A modest pullback in mortgage rates early this year helped lift home sales in January and February, but rates mostly ticked up in February and March, when many of the home sales that were finalized last month would have taken place.
Mortgage rates have risen the past three weeks, with the average rate on a 30-year mortgage moving this week above 7% to its highest level since late November, mortgage buyer Freddie Mac said Thursday.
The trend is a setback for home shoppers this spring homebuying season, traditionally the housing market’s busiest time of the year.
“Home sales essentially remain stuck because (the) mortgage rate has been stable and inventory is not really rising,” said Lawrence Yun, the NAR’s chief economist.
Despite the pullback in sales, the national median home sales price climbed 4.8% from a year earlier to $393,500. That's the highest median sales price for any March on records going back to 1999 and marks the ninth month in a row that prices have risen compared to a year earlier.
The latest surge in prices reflects the heightened competition many home shoppers are facing. Consider, 60% of homes purchased in March sold within less than a month of hitting the market. And 29% of homes sold above their initial list price, up from 28% in March last year, Yun said.
“Inventory is simply not there,” he said.
While the supply of homes on the market remains below the historical average, the typical increase in homes for sale that happens ahead of the spring homebuying season gave home shoppers a wider selection of properties to choose from.
At the end of last month, there were 1.11 million unsold homes on the market, a 4.7% increase from February and up 14.4% from a year earlier, the NAR said. That's still well short of the 1.7 million homes on the market in March 2019, before the pandemic.
The available inventory at the end of last month amounted to a 3.2-month supply, going by the current sales pace. That’s up from a 2.9-month supply in February and a 2.7-month supply in March last year. In a more balanced market between buyers and sellers, there is a 4- to 5-month supply.
That shortage of homes on the market means home sellers generally having an edge on buyers, especially those vying for the most affordable homes, which often fetch multiple offers.
The U.S. housing market is coming off a deep, 2-year sales slump triggered by a sharp rise in mortgage rates and a dearth of homes on the market. Sales of previously occupied U.S. homes sank to a nearly 30-year low last year, tumbling 18.7% from 2022 as the average rate on a 30-year mortgage surged to a 23-year high of 7.79%, according to Freddie Mac.
The average rate on a 30-year mortgage got as low as 6.67% in mid January, but has been creeping higher, reaching 7.1% this week. When mortgage rates rise, they can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford.
Mortgage rates have mostly drifted higher in recent weeks as stronger-than-expected reports on employment and inflation stoked doubt among bond investors over how soon the Federal Reserve will move to lower its benchmark interest rate.
Home loan borrowing rates are influenced by several factors, including how the bond market reacts to the Fed’s interest rate policy and the moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
The yield on the 10-year Treasury jumped to around 4.66% on Tuesday — its highest level since early November — after top officials at the Federal Reserve suggested the central bank may hold its main interest steady for a while. The central bank wants to get more confidence that inflation is sustainably heading toward its target of 2%.
Many economists still expect that mortgage rates will ease modestly this year, which could give homebuyers who can’t afford to pay all cash for a home more purchasing power.
“The 30-year-fixed mortgage rate could rise for few months to maybe even 7.5% before settling back down to 6.5% by the end of the year,” Yun said. In January, NAR forecast the average rate would drop to 6.1% by year’s end.
Economists at Realtor.com also project that the rate could average 6.5% by the end of this year.
For now, first-time homebuyers who don’t have any home equity to put toward their down payment continue to have a tough time getting into the housing market, though they accounted for 32% of all homes sold last month, an increase from 26% in February and 28% in March last year. That’s still well short of the 40% of sales they’ve accounted for historically.
Prospective homebuyers are facing competition from buyers who can afford to buy a home in cash. Some 28% of homes sold last month were purchased entirely with cash, down from 33% in February, but up from 27% a year ago, the NAR said.
A housing development in Cranberry Township, Pa., is shown on Friday, March 29, 2024. On Thursday, April 18, 2024, the National Association of Realtors reports on existing home sales for March. (AP Photo/Gene J. Puskar)
TEL AVIV, Israel (AP) — U.S. Secretary of State Antony Blinken was meeting with Israeli leaders on Wednesday in his push for a cease-fire deal between Israel and Hamas, saying “the time is now” for an agreement that would free hostages and bring a pause in the nearly seven months of war in Gaza.
He has said Hamas would bear the blame for any failure to get a deal off the ground.
Blinken is on his seventh visit to the region since the war erupted in October in his bid to secure what’s been an elusive deal between Israel and Hamas that could avert an Israeli incursion into the southern Gaza city of Rafah, where hundreds of thousands of Palestinians are sheltering.
The current round of talks appears to be serious, but the sides remain far apart on one key issue — whether the war should end as part of an emerging deal.
“We are determined to get a cease-fire that brings the hostages home and to get it now, and the only reason that that wouldn’t be achieved is because of Hamas,” Blinken told Israel’s ceremonial President Isaac Herzog at a meeting in Tel Aviv.
“There is a proposal on the table, and as we’ve said, no delays, no excuses,” he said.
The deal would also allow much needed food, medicine and water to get into Gaza, Blinken said.
As part of his visit, Blinken will meet Israeli Prime Minister Benjamin Netanyahu. According to the State Department, he will also meet with the families of hostages and visit an Israeli port where aid for Gaza is entering.
Blinken’s comments came on the last leg of his regional visit, with previous stops in Saudi Arabia and Jordan, where he urged Hamas to accept the latest proposal, calling it “extraordinarily generous” on Israel’s part.
But the United States has also criticized Israel for its plan to invade Rafah, Gaza’s southernmost city where some 1.5 million Palestinians are sheltering from fighting elsewhere, saying that any major offensive there would bring potential harm to civilians and should be avoided.
Netanyahu has repeatedly vowed to invade Rafah, which he says is Hamas’ last stronghold, and on Tuesday’s pledged to do so “with or without” a cease-fire deal.
The current deal that is being discussed — with brokering by the U.S., Egypt and Qatar — would see the release of dozens of hostages in exchange for a six-week halt in fighting as part of an initial phase, according to an Egyptian official and Israeli media. Hundreds of Palestinian prisoners held by Israel would also be released, including some serving long sentences.
But a sticking point remains over what happens next. Hamas has demanded assurances that an eventual release of all hostages will bring a complete end to Israel’s nearly seven-month assault in Gaza and a withdrawal of its troops from the devastated territory.
Israel has offered only an extended pause, vowing to resume its offensive once the first phase of the deal is over. The issue has repeatedly obstructed efforts by the mediators during months of talks.
The Israel-Hamas war was sparked by the unprecedented Oct. 7 raid into southern Israel in which militants killed around 1,200 people, mostly civilians, and abducted around 250 hostages. Israel says the militants are still holding around 100 hostages and the remains of more than 30 others.
The war in Gaza has killed more than 34,000 Palestinians, according to local health officials. The war has driven around 80% of Gaza’s population of 2.3 million from their homes, caused vast destruction in several towns and cities and pushed northern Gaza to the brink of famine.
Follow AP’s coverage of the war at https://apnews.com/hub/israel-hamas-war
Families and supporters of Israeli hostages held by Hamas in Gaza hold banners and shut slogans during a protest calling for their return, outside a meeting between U.S. Secretary of State Antony Blinken and families of hostages in Tel Aviv, Wednesday, May 1, 2024. (AP Photo/Oded Balilty)
U.S. Secretary of State Antony Blinken, left, meets with Israeli President Isaac Herzog in Tel Aviv, Israel Wednesday, May 1, 2024. (Evelyn Hockstein/Pool Photo via AP)
Families and supporters of Israeli hostages held by Hamas in Gaza hold banners and flags during a protest calling for their return, outside a meeting between U.S. Secretary of State Antony Blinken and families of hostages in Tel Aviv, Israel, Wednesday, May 1, 2024. (AP Photo/Oded Balilty)
A woman holds a banner with families and supporters of Israeli hostages held by Hamas in Gaza during a protest calling for their return, outside a meeting between U.S. Secretary of State Antony Blinken and families of hostages in Tel Aviv, Israel, Wednesday, May 1, 2024. (AP Photo/Oded Balilty)
Families and supporters of Israeli hostages held by Hamas in Gaza hold banners and flags during a protest calling for their return, outside a meeting between U.S. Secretary of State Antony Blinken and families of hostages in Tel Aviv, Israel, Wednesday, May 1, 2024. (AP Photo/Oded Balilty)
Families and supporters of Israeli hostages held by Hamas in Gaza hold banners and flags during a protest calling for their return, outside a meeting between U.S. Secretary of State Antony Blinken and families of hostages in Tel Aviv, Israel, Wednesday, May 1, 2024. (AP Photo/Oded Balilty)
U.S. Secretary of State Antony Blinken, left, and Israeli President Isaac Herzog shake hands during their meeting in Tel Aviv, Israel Wednesday, May 1, 2024. (Evelyn Hockstein/Pool Photo via AP)
Mourners carry the bodies of members of the Abu Taha family who were killed in an Israeli airstrike, during their funeral at Al-Salam cemetery, east of Rafah, Gaza Strip. Monday, April 29, 2024. (AP Photo/Mohammad Jahjouh)
FILE - Israeli Prime Minister Benjamin Netanyahu attends a press conference in the Kirya military base in Tel Aviv, Israel on Oct. 28, 2023. Netanyahu pledged Tuesday, April 30 to launch an incursion into the southern Gaza city of Rafah, where hundreds of thousands of Palestinians are sheltering from the almost 7-month-long war, just as cease-fire negotiations between Israel and Hamas appear to be gaining steam. (Abir Sultan/Pool Photo via AP, File)
Palestinians look at the destruction after an Israeli airstrike in Rafah, Gaza Strip. Monday, April 29, 2024. (AP Photo/Mohammad Jahjouh)
A woman holds a banner and shouts slogans with families and supporters of Israeli hostages held by Hamas in Gaza during a protest calling for their return, outside a meeting between U.S. Secretary of State Antony Blinken and families of hostages in Tel Aviv, Israel, Wednesday, May 1, 2024. (AP Photo/Oded Balilty)
U.S. Secretary of State Antony Blinken, left, and Israeli President Isaac Herzog talk during their meeting in Tel Aviv, Israel, Wednesday, May 1, 2024. (Evelyn Hockstein/Pool Photo via AP)
