Low Supply and High Demand Remain the Dynamic in Housing

The latest Existing and New Home Sales reports show that low supply continues to be the biggest hinderance for buyers shopping for homes around the country.

Existing Home Sales Down 3.7%

Existing Home Sales March 2021Existing Home Sales, which measures closings on existing homes, were down 3.7% from February to March. However, sales were up 12.3% when compared to March of last year.

The decline in the monthly sales reading was not due to a lack of demand, but to a lack of inventory. There were just 1.07 million homes for sale at the end of March, which was slightly higher than the amount of available homes in February, but 28.2% lower on an annual basis. The amount equates to just a 2.1 months' supply of homes. Typically, a 6 months' supply is considered healthy.

As a result of this tight level of inventory, homes were only on the market for 18 days on average, which is a record low and down from the previous record low of 20 set in February.

The median home price was $329,100, which is a record high and up 17.2% compared to March of last year. Note, this is not the same as appreciation. It simply means half the homes sold were above that price and half were below it. Sales on the low end were down 25%, while sales of homes above $1 million were sharply higher. This dragged the median home price higher.

First-time home buyers increased from 31% in February to 32% in March, which is a decent level considering the stiff competition for homes on the lower end. Investors purchased 15% of homes in March, which was down from 17% in February, while cash buyers increased from 22% to 23% over that same period.

New Home Sales Surge in March

New Home Sales March 2021

On the flip side, New Home Sales, which measures signed contracts on new homes, surged nearly 21% higher in March. February's sales figure was also revised higher and without that revision, sales in March would have been 32% higher than February's original number. In addition, sales were also almost 67% higher on a year over year basis, but that is likely skewed due to the economy being shut down in March of last year.

Looking at inventory levels, there were only 307,000 new homes for sale in March, which is down 7% from last year. This equates to a 3.6 months' supply of homes at the end of March, which is still below healthy levels. There were also 14% less homes for sale under $300,000 compared to March of last year.

The median home price was reported at $330,800, up not even 1% from last year. Again, this is not the same as appreciation. It simply means half the homes sold were above that price and half were below it.

The Latest on Jobless Claims

Jobless Claims Week of April 17, 2021The number of people filing for unemployment benefits for the first time fell for the second week in a row, as Initial Jobless Claim declined by 39,000 to 547,000. This is the lowest level since the pandemic began. California (+72K), Texas (+43K) and New York (+41K) reported the largest number of claims.

Continuing Claims, which measure people who continue to receive benefits, dropped slightly but remain elevated at around 3.7 million.

Pandemic Unemployment Assistance Claims (which provide benefits to people who would not usually qualify) and Pandemic Emergency Claims (which extends benefits after regular benefits expire) increased by a combined 700,000.

All in all, 17.5 million individuals are still receiving benefits throughout all programs, which is up 500,000 from the previous week. While it's encouraging to see the improvement in Initial Jobless Claims, the bottom line is that our recovery still has a way to go.