US: Tight inventories keep a low ceiling on Home Sales - Wells Fargo

US Existing home sales rose 1.1% March, showed data released today. Analysts at Wells Fargo, point out that inventories remain lean across much of the country, contributing to continued strong price appreciation.

Key Quotes: 

“Resales of existing homes rose 1.1 percent in March, as sales bounced back in the Northeast and Midwest. Tight inventories continue to limit sales, with the number of homes available for sale falling 7.2 percent over the past year.”

“The tight supply of homes has contributed to a very competitive housing market this spring. Fifty percent of the homes sold in March were on the market for less than a month, and the median price of a home sold in March was 5.8 percent higher than it was a year ago.”

“The inventory of homes available for sale rose 5.7 percent to 1.67 million units in March; however, that did not represent all that much improvement. The inventory data are not seasonally adjusted. Inventories tend to fall late in the year and tend to bottom out in December of each year, before rising in the spring.”

“On a year-to-year basis, the number of homes for sale is 7.2 percent lower than last March. Moreover, the number of homes available for sale has fallen on a year-to-year basis for the past 34 months.”

“We continue to look for home sales to gradually improve this year, driven by stronger job and income growth and some additional supply in the new home market, which should allow for more trade-up and downsizing moves and free up homes for first-time buyers.”