U.S. home sales fell in March after bouncing back from nearly a year in declines a month earlier, according to data released Thursday by the National Association of Realtors (NAR).
Existing home sales, which include transactions for single-family homes, townhomes, condominiums and co-ops, dipped by 2.4 percent last month to an annual rate of 4.4 million, the data showed. Sales declined 22 percent year-over-year.
“Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” NAR Chief Economist Lawrence Yun said in a statement.
Mortgage rates continue to decline from their high point late last year, falling to 6.27 percent last week. But Yun said starter homes are receiving multiple offers, meaning more supply is needed to satisfy demand.
Existing home sales figures follow data released earlier this week showing a drop in the number of homes under construction.
Construction numbers released by the Commerce Department on Tuesday showed a 0.8 percent decrease in housing starts in March, led by a decline in construction of new multifamily units — buildings with five or more units — which fell by 6.7 percent.
But single-family starts increased by 2.7 percent from a month earlier to an annual rate of 861,000 units.
NAR data showed that median home prices dropped by 0.9 percent from March 2022 to $375,700, although they climbed in three out of four regions.
“Home prices continue to rise in regions where jobs are being added and housing is relatively affordable,” Yun continued. “However, the more expensive areas of the country are adjusting to lower prices.”
Home sales are also taking a hit resulting from historically low mortgage rates during the pandemic. This has made homeowners unwilling to list their homes and risk higher monthly payments, said Nicole Bachaud, senior economist at Zillow.
“Low inventory, in general, is going to remain a driving force in the movement of prices in the housing market, so affordability will likely be a barrier to those looking to transact for the foreseeable future,” Bachaud said.
“As we move further away from the days of 3% rates, existing homeowners will become less precious about their ultra-low monthly payments and new listings will slowly fill the market again,” she added.