Sales of previously occupied U.S. homes slowed in March, a sluggish start to the spring homebuying season as elevated mortgage rates and rising prices discouraged prospective home shoppers.
Existing home sales fell 5.9% last month from February to a seasonally adjusted annual rate of 4.02 million units, the National Association of Realtors said Thursday. The March sales decline is the largest monthly drop since November 2022, when sales fell 6.7% from the previous month.
Sales fell 2.4% compared with March last year. The latest home sales fell short of the 4.12 million pace economists were expecting, according to FactSet.
The average cost of a U.S. mortgage, which climbed to its highest level in two months last week, is a significant barrier for would-be homebuyers, said Lawrence Yun, NAR’s chief economist.
“Residential housing mobility, currently at historical lows, signals the troublesome possibility of less economic mobility for society,” Yun said.
Home prices increased on an annual basis for the 21st consecutive month, although at a slower rate. The national median sales price rose 2.7% in March from a year earlier to $403,700, an all-time high for March, but the smallest annual increase since August.
The U.S. housing market has been in a sales slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes fell last year to their lowest level in nearly 30 years.
Higher mortgage rates also dampened the start of the spring homebuying season in 2024. This year, after climbing to a just above 7% in mid-January, the average rate on a 30-year mortgage has remained mostly elevated, climbing last week to 6.83%, its highest level in eight weeks, according to mortgage buyer Freddie Mac.
Sales fell in March even as home shoppers more homes hit the market for the spring homebuying season.
There were 1.33 million unsold homes at the end of last month, an 8.1% increase from February, NAR said.
That translates to a 4-month supply at the current sales pace, up from a 3.2-month pace at the end of March last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.
“I felt that more inventory would lead to more sales, but that’s not the case,” Yun said.
