US: Existing home sales dropped in March, prices surged to record levels – Wells Fargo

The March existing home sales report confirms what anecdotal data have suggested for some time that the housing market heated up well ahead of the rest of the economy, noted analysts at Wells Fargo. They highlight that prices have surged to record levels.

Key Quotes: 

“Existing home sales fell 3.7% in March to a 6.01-million unit pace. The decline was slightly larger than expected and comes one month after extreme weather severely cut into economic activity in Texas and other parts of the South and Midwest.”

“Higher home prices are also likely pushing some buyers to the sidelines. The median price of an existing home has risen 17.2% over the past year to $329,100. Prices for single-family homes surged 18.4% over the past year to $334,500, both marking new historic highs.”

“We still feel that bubble talk is premature. The surge in home prices reflects a historic imbalance in the supply and demand for housing. Home sales turned up well before the economy began to improve, with record low mortgage rates and the transition to remote work and schooling setting off a race for more living space.”

“The strength in home prices will boost realtor's commissions, which is the key way that existing home sales influence quarterly GDP. The latest sales and home prices data are other variables pointing to exceptionally strong GDP growth in Q1 and Q2.”