Market Pulse – March 15

Get ready to see some big home sales numbers. Beginning next month, the year-over-year residential closings numbers will be comparing today’s rising market to last year’s three-month COVID-induced sales decline.

That should result in some big growth rates that are misleading unless you add some context and trends data.

When the first COVID effects hit the local economy in mid-March, closings were 8.1% lower than in March 2019. In April, the year-over-year comparison dropped to 16.8%. It bottomed out in May when closings lagged May 2019 by 20.5%.

This year’s sales have been underperforming the three-month moving average since October. Sales are growing, but the growth rate is slowing. Seasonal slowing accounts for some of the most current trend pattern. Lack of inventory and rising prices are another contributor.

The outlook through summer is for a continued strong market, but mortgage rate increases are beginning to nibble at the extra buying power they afforded consumers to fuel the market much of last year. As that extra buying power bumps up against an ever-tightening inventory, there will be additional upward pressure on prices and a new headwind for sales.

February’s active inventory was a little less than half of what it was in February last year.