Home sales fall in March, mortgage rates remain low

 

WASHINGTON – Americans bought fewer previously owned homes in March, a sober reminder that the housing market remains weak despite mortgage rates that continue to hover near record lows.

The National Association of Realtors said Thursday that home sales fell 2.6% last month to a seasonally adjusted annual rate of 4.48 million. That followed a revised 4.6 million sold in February.

Meantime, the average rate on the 30-year fixed mortgage stayed near its lowest level on record, keeping home-buying and refinancing affordable.

A mild winter may have encouraged more people to buy earlier, essentially stealing sales from March.

Sales fell across most of the country. They were unchanged on a seasonal basis in the Midwest but fell by 1.1% in the South, 1.7% in the Northeast and 7.4% in the West.

Home sales

The first three months of 2012 made up the best winter for sales in five years. The increase offers some encouragement ahead of the spring-buying season. Still, sales remain far below the 6 million per year that economists equate with healthy markets.

First-time buyers, who are critical to a housing recovery, rose to 33% of all purchases last month. In healthy markets, they make up at least 40%.

The supply of homes on the market fell 1.3% last month to 2.37 million, which could help drive up prices further in the coming months.

One reason is that home foreclosures declined, although they are still high. Homes at risk of foreclosure made up 29% of sales, down from 34% in February. In healthier markets, foreclosures make up less than 10% of sales.

There have been other signs in recent months that the housing market is slowly improving.

Builders are laying plans to construct more homes in 2012 than at any other point in the past 3 1/2 years. More jobs and a better outlook among buyers could also make 2012 the first year since 2008 that construction adds to the U.S. economy.

The unemployment rate has fallen from 9.1% in August to 8.2% last month. Employers added an average of 212,000 jobs a month from January through March.

Mortgage rates are hovering just above record lows. And the median sales price of homes rose for the second straight month in March, to $163,800.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan rose last week to 3.9% from 3.88%. The rate touched 3.87% in February, which was the lowest since long-term mortgages began in the 1950s.

The 30-year loan is the most common financing option for home buyers.

The 15-year mortgage, which is popular with those refinancing, rose to 3.13% from 3.11%, an all-time low.

Cheaper mortgages have done little to boost home sales. Americans bought 2.6% fewer homes in March, according to a separate report released by the National Association of Realtors.

Some would-be buyers are skeptical about purchasing a home with prices still falling. Home appraisals that are higher or lower than the sales price have scuttled some home contracts. And many Americans are struggling with damaged credit and unstable finances.

To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for the 30-year loan rose to 0.8 from 0.7. The fee for the 15-year loan was unchanged at 0.7.

For the five-year adjustable loan, the average rate fell to 2.78% from 2.85%. The average fee for the loan was unchanged at 0.7.

The average fee on the one-year adjustable loan ticked up to 2.81% from 2.80%. The average fee was unchanged at 0.6.

Copyright 2012 The Associated Press. All rights reserved.
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