March continues to look better for home sales as additional reports from across the U.S. roll in.
On Friday, the Atlanta Board of Realtors reported 3,993 finalized home sales in March, up 13.8% from a year earlier. The San Antonio Board of Realtors reported a 17% sales gain in that span, and the Realtor association in Washington, D.C., disclosed a 5.7% gain in sales of single-family homes.
Those reports came after the Minneapolis Area Association of Realtors on Thursday announced 3,907 closed home sales in March, up 21% from a year earlier. Several other cities, including Houston, Seattle and Jacksonville, Fla., earlier this week posted big March gains, stoking optimism among Realtors, home builders and economists for a robust spring season.
“I’m seeing a lot of multiple-offer situations when a house is well-priced,” said Nancy See, senior vice president and managing broker at Atlanta Fine Homes Sotheby’s International Realty in Atlanta’s Buckhead area. “Right now, buyers are having to act very quickly to get the house they want. It’s almost like a buying frenzy.”
A strong spring would be welcomed by most in the housing industry after last year’s stall, when buyers were cowed by steeply rising prices and a fitful economic recovery that hadn’t found its legs yet. Now, buyers are emboldened by a year of strong job growth, generally improving personal credit and low interest rates that might not last much longer.
There is cause for concern, though, that some factors might sap the market’s momentum. Many buyers likely are motivated by mortgage rates that have been below 4% since November. But those rates are likely to rise later this year once the Federal Reserve increases short-term rates. Thus, some of the recent surge in sales likely can be traced to buyers hastening their purchases to ensure lower rates, meaning a slowdown in market momentum likely is inevitable.
Second, tight inventory of homes available for sale in many markets has led to a resurgence in price increases, which has cooled the market in the past. In Atlanta, median prices were up 8.5% from a year ago to $218,000 in March. In Minnesota’s Twin Cities, they were up 10.5% to $210,000. In Charlotte, they were up 9.9% to $189,400.
For now, though, there is optimism aplenty. Credit Suisse Securities LLC analyst Mike Dahl on Thursday raised his stock-price targets for several big home builders by 8% on average after his firm’s monthly survey of real-estate agents across the country found “solid demand” for homes in the early spring.
“Agents have seen better buyer interest due to the favorable mortgage-rate environment with added support from government initiatives (reduced down payments and lower FHA premiums), while lower inventory levels and fears of higher future costs drove incremental urgency,” Mr. Dahl wrote in a report distributed to Credit Suisse clients.
In a separate report this week, Wells Fargo Securities analyst Adam Rudiger outlined the findings of his monthly survey of 150 sales managers working for home builders across the country. The survey found improving conditions in that 38% of respondents reported better-than-expected sales in March, up from 34% a year earlier.