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Both new and existing home sales volume eased in March

Both new and existing home sales volume eased in March after both posted increases in February.  Although the level of sales activity dropped from the previous month, the declines were minimal which might suggest that demand for housing may at least have bottomed out.  New home sales were also revised higher for the previous three months which is also a positive sign.

New home sales eased a slight 0.6% in March to a seasonally adjusted 356,000 homes from an upwardly revised February figure of 358,000.  Sales for the previous three months were also revised higher by 31,000 units.  In March, new home inventories declined to 308,000 from a February figure of 324,000 on a non-seasonally adjusted basis.  Non-seasonally adjusted units of unsold inventory have not recorded a monthly increase since May 2007 and are now at their lowest levels since March 2002 as builders continue to scale back building activity.  There are now 10.7 months of supply on a seasonally-adjusted basis based on the current sales pace which is the lowest it has been since June 2008.  In March, median new home prices fell to $201,400 from an upwardly revised February figure of $208,700.  Median new home prices in March are the lowest they have been since December 2003. Median new home prices fell 3.5% from last month and are down 12.2% from the same year-ago period.  Falling new home prices, however, have driven affordability to a new all-time high.  Falling mortgage rates along with diminishing new home prices have pushed the new home affordability ratio to 59.5% in March.

Annualized sales of total existing homes in March decreased 3.0% from February levels to 4.570 million units.  Sales of existing homes are down 7.1% from the 4.920 million units in March 2008.  Median existing home prices in March increased to $175,200 from $168,200 in February.  This is the second straight month that existing home prices have increased and the highest they have been since December.  Inventory of existing homes declined 1.6 percent to a preliminary 3,737,000 units from 3,798,000 units in February.  At the current sales pace, there are 9.8 months of supply of existing homes on the market which is slightly higher than the 9.7 months of supply in February because of the drop-off in sales activity.

National average mortgage rates declined from the previous week to 4.78% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on April 30th.  Mortgage rates are now at their lowest levels since Freddie Mac started the survey in 1970, matching the all-time low figure set earlier in the month.  This was the third straight week that mortgage rates have declined while rates have recorded weekly declines in seven out of the past eight weeks.  In the week ending April 24th, the MBA’s seasonally-adjusted Purchase Index dropped to 251.6 from 253.0 in the previous week.  This is the third straight week the purchase index has declined and the lowest the purchase index has been since the beginning of March.  The latest figure reflects a slight 0.55% decline from last week and a 26.02% drop from the same period last year. 

For market-level data and analysis please visit our website at http://www.hwmarketintelligence.com.  For more detailed information on the indicators discussed in this key indicator alert, please visit the following links:

Hanley Wood Market Intelligence

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