Sales of existing homes in the Indianapolis area jump 19 percent

Existing-home sales in central Indiana soared 19.2 percent in March while rising for the 16th month out of the last 17.

The increase came amid a continuing increase in prices and a big decline in housing inventory.

In the 13-county area, closed home sales rose from 2,579 in March 2016 to 3,074 last month, according to data released Tuesday by MIBOR Realtor Association.

Except for February, when they dipped 1.6 percent, closed sales in the area have risen every month on a year-over-year basis since October 2015.

The total number of active home listings in March dropped 17.1 percent, from 10,119 a year ago to 8,391 at the end of last month. New listings were down 1 percent, to 4,157.

The average home sale price during the year-over-year period rose 4 percent, to $189,797. The median price rose 4.1 percent, to $156,000.

Pending sales in the area were up 5.3 percent during the month, to 3,158.

Statewide, there was a 13.2 percent increase in closed sales in March compared with the same month of 2016, the Indiana Association of Realtors said, and the average price of a home rose 6.1 percent, to $166,710.

The statewide inventory of homes dropped 16.2 percent, to 27,375 units.

County breakdown

In Marion County—typically the most active market in central Indiana—closed sales jumped 21.1 percent in March, to 1,295.

The average sales price in the county rose 4.5 percent, to $152,286. The inventory of single-family homes for sale fell 21.9 percent, to 2,938. New listings were down 0.3 percent, to 1,750.

In Hamilton County, sales were up 5.9 percent, to 577, while the average sales price rose 7.2 percent, to $294,355.

In Hendricks County, sales jumped 27.6 percent, to 296, while the average sales price jumped 4.8 percent, to $202,091.

In Johnson County, sales rose 7.4 percent, to 232, while the average sales price increased 10.9 percent, to $197,813.

Boone County saw a 79 percent increase in sales, to 125, as the average price slipped 4.3 percent, to $281,675.

National trends

On a national basis, Americans purchased homes in March at the fastest pace in over a decade, a strong start to the traditional spring buying season.

Sales of existing homes climbed 4.4 percent last month, to a seasonally adjusted annual rate of 5.71 million, the National Association of Realtors said April 21. This was the fastest sales rate since February 2007.

The U.S. housing market faces something of a split personality: A stable economy has intensified demand from would-be buyers, but the number of properties listed for sale has been steadily fading. The result of this trend is prices rising faster than incomes, homes staying on the market for fewer days and a limit on just how much home sales can grow. It's a situation that rewards would-be buyers who can act quickly and decisively.

"The pace of sales we saw in March is unsustainable," said Nela Richardson, chief economist at the brokerage Redfin. "Sales may be soaring, but inventory isn't."

The inventory shortage largely reflects the legacy of a housing bubble that began to burst a decade ago.

Foreclosed properties were snapped up by investors who turned the homes into income-generating rentals, depriving the market of supply. And many owners who escaped the downturn unharmed chose to refinance their mortgages at extremely low rates, possibly making them hesitant to move to a new house that could increase their monthly costs.

This mismatch between supply and demand can be seen in two simple figures tracked by the Realtors.

Sales have risen 5.9 percent over the past year, but the inventory of homes for sale has fallen 6.6 percent, to 1.83 million properties. This means there are essentially more buyers chasing fewer properties.

The consequences can be seen in home values and days on the market. The median sales price in March climbed 6.8 percent over the past year, to $236,400, significantly outpacing wage growth. And it took an average of 34 days to complete a sale, compared to 47 days a year ago.