Sales of previously owned homes fell in March, dropping to the lowest level since July 2012 as higher interest rates, soaring prices and a tight inventory discouraged potential buyers, according to industry data released Tuesday.
The National Association of Realtors reported that existing-home sales declined 0.2 percent in March from the previous month to a seasonally adjusted annual rate of 4.6 million. The performance — which captures contracts that closed last month and were negotiated in January and February — was better than what many analysts had expected.
Still, sales are off the norm for this time of year, and the group acknowledged disappointment with the March figures, which were down 7.5 percent from a year earlier. Sales have dropped for seven of the past eight months.
“There really should be stronger levels of home sales given our population growth,” Lawrence Yun, the group’s chief economist, said in a statement. Based on the size of the population, a normal sales rate would be closer to 5.5 million, the group said.
Sales have been sluggish for months in part because investors who were snapping up homes cheaply began retreating when prices and interest rates climbed, and traditional buyers have been slow to fill the gap. Housing analysts are especially worried about the dearth of first-time buyers. They’ve accounted for roughly a third of home purchases in the past year, well below the historical norm.
The trend continued in March, the group’s figures show. Miserable weather in many parts of the country contributed to the poor sales among all types of buyers, Yun said.
But Yun and other analysts expect that will change as the economy and the job market improve, and as home prices cool off after the spectacular gains during 2012 and 2013.
The median price for single-family homes, townhouses, condominiums and co-ops was $198,500 last month, a 7.9 percent increase from a year earlier, the group reported. But by several measures, the pace of price gains is slowing.
The price increases in recent years have been largely because of high demand. The supply of homes has been tight in recent years, particulary the lower-priced ones that are popular with first-time buyers. It would take 5.2 months to sell the homes on the market at the current pace — below the six-month supply available in a more normal market.
But the supply of homes for sale rose 4.7 percent, to 1.99 million, in March.
“In many markets, home sales were being turbocharged by investor purchases and prices got pushed out of whack,” said Mike Larson, a housing analyst at Weiss Research. “As investor buying cools off, demand is falling because of that and we’re starting to see some price rationalization. There’s time to salvage the spring selling season.”
Regionally, sales improved in the Northeast and Midwest, but they were offset by losses in the West and South, which includes the Washington region.
March sales were up 9.1 percent in the Northeast and 4 percent in the Midwest from the previous month. They fell 3 percent in the South and 3.7 percent in the West.
Amrita Jayakumar contributed to this report.