Home sales in March posted their biggest decline in more than a year, reversing course after a positive start this year as rising mortgage rates frightened off buyers.

Sales of previously owned homes decreased 4.3% from the prior month to a seasonally adjusted annual rate of 4.19 million, the National Association of Realtors said Thursday. It was the biggest percentage decline on a monthly basis since November 2022, NAR said.

After sales tumbled to their lowest level in nearly 30 years in 2023, activity picked up to start this year. Home sales rose during the first two months as buyers took advantage of a decline in rates and active listings that ticked higher early in the year.

But mortgage rates rose again in February. That sent buyers to the sidelines and it now threatens to squash momentum during the crucial spring home-buying season, which is typically the busiest time of year in the housing market.

The average rate on a 30-year fixed mortgage has moved back toward 7%, according to Freddie Mac. While many economists expect rates to decline later this year, stronger-than-expected inflation data last week could prompt Federal Reserve officials to hold rates at their current level for longer. That could also keep mortgage rates from declining.

Home buyers are also confused about coming changes to rules about how real-estate agents get paid, and whether those changes could increase or decrease their costs. That is causing some home shoppers and sellers to pause until there is more clarity when the new rules go into effect in July.

“There’s so many mixed signals now in the market that for many people, it’s just too much,” said Selma Hepp, chief economist at CoreLogic. “I think they’re just sitting it out.”

While higher mortgage rates make home purchases more expensive for many buyers, a persistently low supply of homes for sale is also pushing prices higher.

The national median existing-home price rose 4.8% in March from a year earlier to $393,500, NAR said.

“Home sales are essentially stuck,” said Lawrence Yun, NAR’s chief economist. “We need more inventory, definitely.”

On an annual basis, existing home sales fell 3.7% in March. These sales make up most of the housing market.

Economists surveyed by The Wall Street Journal estimated sales of previously owned homes fell a seasonally adjusted 4.8% in March from February.

Homes typically go under contract a month or two before the contracts close, so the March data largely reflect purchase decisions made in February and January.

For some who bought in March, they found less competition. David Bramlett and Alexandra Hodson started house hunting last fall but decided to wait. When they re-entered the market this year, interest rates had declined, Bramlett said. The couple bought a four-bedroom home with a yard in Cumming, Ga., in March for $480,000.

“There was no bidding war,” Bramlett said. “It was good to get in when we did, where we did, with a motivated seller.”

But affordability has worsened in recent weeks. The median monthly payment for a home purchase rose to $2,747 in the four weeks ended April 7, up 11% from a year earlier, according to real-estate brokerage Redfin.

“March and April slowed down tremendously,” said Clint Jordan, a real-estate agent in Colorado Springs, Colo. “Rates are a little bit higher, so a lot of our buyers are sitting back.”

The share of first-time buyers in the market was 32% in March, up from 28% a year earlier. About 28% of March existing-home sales were purchased in cash, up from 27% in the same month a year ago, NAR said.

The typical home sold in March was on the market for 33 days, up from 29 days a year earlier, NAR said.

Nationally, there were 1.11 million homes for sale or under contract at the end of March, up 4.7% from February and up 14.4% from March 2023, NAR said. At the current sales pace, there was a 3.2-month supply of homes on the market at the end of March.

Despite the increase in inventory, the supply of homes for sale in March was still 37.9% below typical prepandemic levels, according to Realtor.com.

But some markets are more amply supplied. In San Antonio, inventory in March was 27% above prepandemic levels.

“It is a buyer’s market now,” said Maricela Mares Castillo, a real-estate agent in San Antonio. “They don’t have to settle as much as they may have last year.”

   

Florida’s homeowners market may look better than it has in the past, but Travelers Cos. is still steering clear, according to Travelers Personal Insurance President Michael Klein. It’s still a highly catastrophe-exposed geography and carriers are vulnerable to an assigned risk obligation if a significant catastrophe strikes, he explained during a first-quarter earnings conference call. “While we do see signs of improvement ... it’s going to take more. We haven’t seen enough change to cause us to change our perspective on wanting to reopen to business," said Klein. “It is still a place where we think the risk reward is not in balance." Chairman and Chief Executive Officer Alan Schnitzer said enacted tort reforms were an “excellent start” in Florida. “We would love other states to follow suit,” he said, but agreed other “structural” elements are an impediment. The company routinely evaluates conditions, both men said.

Travelers Cos. Inc.’s first-quarter net income increased 15% to $1.12 billion despite higher catastrophe losses, largely on elevated activity in Central and Eastern states, Schnitzer said.

Renewal premium change was 16.6% in personal automobile and 13.4% in homeowners and other business, he said. That was basically flat, compared with the fourth quarter for auto, but down from 21.2% in homeowners in the prior quarter. Because Travelers writes mostly 12-month auto policies, Klein pointed out a rate hike enacted in May 2023 is still taking effect on policies renewing this month. Personal auto renewal premiums change should moderate as the year progresses, he said. However, in homeowners the carrier plans to keep raising rates “in response to increased loss costs.” Renewals declined because Travelers took “dramatic increases in property Coverage A limits” in 2022 and 2023 and has caught up with higher values and construction costs. “What you’re looking at now is mostly our outlook for rate” increases for homeowners, said Klein. In terms of non-rate actions, he said the carrier, like others in the industry, is executing broad changes. First, it determines eligibility after evaluating exposure and roof age, he said, and may place underwriting restrictions based on roof conditions or tree overhang. "Our primary approach on risk sharing is really to focus on all other perils and wind-hail-tornado deductibles," said Klein. Travelers has implemented higher tornado and wind-hail deductibles in 21 states, "virtually every severe convective storm-exposed state across the country." "We've increased deductibles to help deal with the exposure, and then managing distribution" and appetite to address aggregated exposure locally and at the state level, Klein said.

Travelers completed its $435 million acquisition of cyber insurance managing general underwriter Corvus Insurance Holdings Inc. at the start of the year (BestWire, Jan 3, 2024).

Bond and Specialty President Jeff Klenk said the company feels "really good about bringing in and leveraging the capabilities of both organizations. We feel really good about the quality, the profitability of the Corvus book of business. It's consistent and we're taking some of those capabilities." Travelers has scanned its business using proprietary technology acquired with Corvus. "We're really comfortable with what we're seeing," said Klenk. Most operating entities of Travelers Cos. Inc. currently have a Best’s Financial Strength Rating of A++ (Superior).      

Climate change will reduce future global income by about 19% in the next 25 years compared to a fictional world that’s not warming, with the poorest areas and those least responsible for heating the atmosphere taking the biggest monetary hit, a new study said. Climate change’s economic bite in how much people make is already locked in at about $38 trillion a year by 2049, according to Wednesday’s study in the journal Nature by researchers at Germany’s Potsdam Institute for Climate Impact Research. By 2100 the financial cost could hit twice what previous studies estimate. “Our analysis shows that climate change will cause massive economic damages within the next 25 years in almost all countries around the world, also in highly-developed ones such as Germany and the U.S., with a projected median income reduction of 11% each and France with 13%,” said study co-author Leonie Wenz, a climate scientist and economist. These damages are compared to a baseline of no climate change and are then applied against overall expected global growth in gross domestic product, said study lead author Max Kotz, a climate scientist. So while it’s 19% globally less than it could have been with no climate change, in most places, income will still grow, just not as much because of warmer temperatures. For the past dozen years, scientists and others have been focusing on extreme weather such as heat waves, floods, droughts, storms as the having the biggest climate impact. But when it comes to financial hit the researchers found “the overall impacts are still mainly driven by average warming, overall temperature increases,” Kotz said. It harms crops and hinders labor production, he said. “Those temperature increases drive the most damages in the future because they’re really the most unprecedented compared to what we’ve experienced historically,” Kotz said. Last year, a record-hot year, the global average temperature was 1.35 degrees Celsius (2.43 degrees Fahrenheit) warmer than pre-industrial times, according to the U.S. National Oceanic and Atmospheric Administration. The globe has not had a month cooler than 20th century average since February 1979. For the past dozen years, scientists and others have been focusing on extreme weather such as heat waves, floods, droughts, storms as the having the biggest climate impact. But when it comes to financial hit the researchers found “the overall impacts are still mainly driven by average warming, overall temperature increases,” Kotz said. It harms crops and hinders labor production, he said. “Those temperature increases drive the most damages in the future because they’re really the most unprecedented compared to what we’ve experienced historically,” Kotz said. Last year, a record-hot year, the global average temperature was 1.35 degrees Celsius (2.43 degrees Fahrenheit) warmer than pre-industrial times, according to the U.S. National Oceanic and Atmospheric Administration. The globe has not had a month cooler than 20th century average since February 1979.