By Christopher S. Rugaber
Sales of existing U.S. homes slipped in March to their lowest level since July 2012 as rising prices and a tight supply of available homes discouraged many would-be buyers.
The National Association of Realtors said Tuesday that sales edged down 0.2 percent to a seasonally adjusted annual rate of 4.59 million. It was the seventh drop in the past eight months.
Sales rose in the U.S. Northeast and Midwest, suggesting that cold winter weather did not slow sales. And the Realtors’ group says the scant decline shows that sales are stabilizing and might strengthen in coming months as the spring buying season picks up. Many Realtors report seeing more potential buyers at open houses.
Sales fell in the West and South, where prices have risen the most in the past year. The price increases were smaller in the Northeast and Midwest.
Nationwide, the median sales price last month was $198,200, up 7.4 percent from 12 months ago.
The sharpest sales increase occurred among homes priced at $1 million or above. Purchases rose 8 percent in that category. Sales fell in nearly every other price group.
Other measures of home prices have shown stronger gains. Real estate data provider CoreLogic says prices rose 12.2 percent in the past year. That might be discouraging some potential investors, who accounted for just 17 percent of home sales in March, the lowest proportion since August. It was down from 21 percent in February.
But in a positive sign, first-time buyers made up 30 percent of home sales in March, the highest proportion in a year. That’s still below the roughly 40 percent that’s consistent with a healthy housing market. First-timers have struggled to save for down payments. They also face tight credit standards.
The Realtors’ group expects 5 million existing homes to change hands this year. That’s down from 5.1 million last year, which was the most in seven years. It’s also below the 5.5 million that reflects a healthy market.
Sales of existing homes rose steadily in the first half of last year, reaching an annual pace of 5.38 million in July. But sales slowed in the fall as rising mortgage rates and higher prices began to squeeze some buyers out of the market. Freezing temperatures and winter storms also kept prospective buyers away from open houses.
Home prices are rising even as sales slow. That’s a sign that the supply of available homes is tight, forcing potential buyers to make higher bids.
There were nearly 2 million homes for sale at the end of March. But at the current sales pace, that’s enough to last only 5.2 months, below the 6 months’ supply that is considered normal.
More construction is needed to boost the supply, the Realtors’ group argues.
The average rate on a 30-year mortgage was 4.27 percent last week, according to mortgage buyer Freddie Mac. That was down from 4.34 percent the previous week. But the rate is still about a full percentage point above last spring’s record lows.