Spring is the strongest season for selling homes. But after three years of dismal sales, most real estate agents are frustrated. They keep hoping this spring finally will thaw out the housing market and get sales moving again.
But two reports on homes sales suggest the market still has far more dead weeds than green shoots. Last week, the National Association of Realtors said sales of existing homes in March were down 3 percent from February. And a Commerce Department report on new homes showed those sales declined, too — they're down more than 30 percent from March 2008.
The news was disappointing because real estate agents had seen an uptick in February when homes were selling at an annual rate of 4.71 million. But that annual pace slipped back down to 4.57 million in March. That level is more than 7 percent below last year's depressed rate.
The big problem is the huge backlog of unsold homes. Builders have to wait more than 10 months to unload the new homes they have completed. It's the same problem for owners of existing homes. Real estate agents say it still is taking nearly 10 months for a house to sell. That's a little quicker than last year, but not by much.
Still, real estate agents do see one encouraging sign: the return of first-time buyers. These tend to be younger people who want to take advantage of the $8,000 tax credit Congress created this year for people buying homes for the first time. Usually, first-time buyers represent just a third of the market, but in March, they were 53 percent of buyers.
Real estate agents are making the case that this really is a great time to buy: interest rates are low; tax incentives are generous and home prices are down about 27 percent since the peak in 2005. In at least a few markets, such as California and Arizona, some real estate brokers say they are starting to see bidding wars as they get multiple offers on the relatively cheap houses in foreclosure.
Most economists say the housing market tends to heal from the bottom up. So these multiple bids at the low end of the market are a good sign. But real estate agents, builders and economists agree that getting the housing market back to robust health will be a slow, tough process that could take years.