And although affordability declined slightly in January, “it is not affecting consumer demand,” says Fleming. Rather, he says, “in the fourth quarter of 2016 owner-occupied home sales increased the fastest outside the top 25 largest markets, as first-time homebuyers are pursuing home purchases in less expensive markets, as the American Enterprise Institute (AEI)/First American National Housing Market Index showed.” He adds, “Strong consumer demand combined with continued healthy wage growth, which increased 2.7% over the past 12 months, continues to support a positive outlook for the spring home buying market.”

Fleming's observations dovetail with recent comments from Rick Sharga, EVP with Ten-X. “As we enter the important spring selling season, consumer demand appears to be strong,” Sharga said in late March. “The big question is whether there will be enough homes for sale to meet that demand.

“The underlying fundamentals of the market remain solid: job and wage growth are strong and interest rates remain low despite a slight uptick after the Fed move,” he continued. “But inventory, especially of entry-level homes, remains stubbornly low.”

Earlier this week, Fleming discussed the results of First American's latest survey of real estate title agents with GlobeSt.com. Click here to read the interview conducted by GlobeSt.com's Carrie Rossenfeld.

SANTA ANA, CA—Although the market for existing-home sales is still underperforming its potential, it has made considerable gains on both a year-over-year and post-recession basis, according to data First American Financial Corp. released Wednesday. Potential existing-home sales decreased in March to a 5.5-million seasonally adjusted, annualized rate, a decline of 1.5% compared to February but an increase of 83.3% over the market potential low point reached in December 2008.

The market for existing-home sales is underperforming its potential by 2.3% or an estimated 129,000 SAAR sales, according to First American. Yet that's a 47% improvement compared to the year-ago period, when the the housing market for existing-home sales was underperforming its potential by an SAAR of 275,000 sales.

Compared to a year ago, the market for potential home sales is up 0.6%. “Despite higher mortgage rates, the potential for home sales increased on an annual basis driven by steady income and job growth, along with a surge in building permits,” says Mark Fleming, chief economist at First American. “While it may be a little late for this spring, the increase in building permits is a welcome sign that some relief may be in sight for the inventory shortages that are holding back many markets from realizing their full potential this spring.”

Citing National Association of Realtors data, Fleming notes that housing inventory increased slightly in March, from 3.5 months' supply in January to 3.8 months' supply in February. However, he says, “upward pressure on house prices persists, as current homeowners remain reluctant to list their homes for sale out of concern they will not be able to find a home to buy.”

And although affordability declined slightly in January, “it is not affecting consumer demand,” says Fleming. Rather, he says, “in the fourth quarter of 2016 owner-occupied home sales increased the fastest outside the top 25 largest markets, as first-time homebuyers are pursuing home purchases in less expensive markets, as the American Enterprise Institute (AEI)/First American National Housing Market Index showed.” He adds, “Strong consumer demand combined with continued healthy wage growth, which increased 2.7% over the past 12 months, continues to support a positive outlook for the spring home buying market.”

Fleming's observations dovetail with recent comments from Rick Sharga, EVP with Ten-X. “As we enter the important spring selling season, consumer demand appears to be strong,” Sharga said in late March. “The big question is whether there will be enough homes for sale to meet that demand.

“The underlying fundamentals of the market remain solid: job and wage growth are strong and interest rates remain low despite a slight uptick after the Fed move,” he continued. “But inventory, especially of entry-level homes, remains stubbornly low.”

Earlier this week, Fleming discussed the results of First American's latest survey of real estate title agents with GlobeSt.com. Click here to read the interview conducted by GlobeSt.com's Carrie Rossenfeld.