U.S. home resales edged downward in March, even though the housing market recovery that has helped boost the economy has shown strength in recent months and is expected to continue.
The National Association of Realtors said on Monday existing home sales edged down 0.6% last month to a seasonally adjusted annual rate of 4.92 million units. Sales of existing homes in March were 10.3 percent higher than during the same period in the prior year.
Economist polled by Reuters had expected home resales to rise to a 5.01 million-unit rate. More recent snapshots of the housing market have been encouraging. The rising tide of homebuyers' sentiment coupled with accommodative monetary policy by the Federal Reserve, which has kept interest rates near record lows, is helping to spur growth in the wake of the 2007-2009 recession.
"This was not entirely unexpected, as housing inventories are lagging far behind demand. While this scenario is good for home values, it also has a detrimental effect on sales as consumers need choices when shopping for a home,'' said Bob Walters, chief economist at Quicken Loans in Detroit.
The nation's inventory of existing homes for sale rose 1.6% during the month to 1.93 million. That represented 4.7 month's supply at March's sales pace, up from 4.6 in February.
Still, it remained below the 6.0 months that is normally considered as a healthy balance between supply and demand. More homes are expected to go on the market next month ahead of the summer buying season, said NAR economist Lawrence Yun.
Nationwide, the median price for a home resale rose to $184,300 in March, up 11.8% from a year earlier, the biggest increase since November 2005. The limited supply of available properties is pushing up home values.
Sales of higher-priced homes have shown larger gains over the past year in comparison with those properties below the $100,000 range, NAR said. Those homes priced above $500,000 are showing a 25% better pace of sale while those below $100,000 have dropped by 16% from a year ago.
Meanwhile, the share of distressed sales, which also include those where the sales price was below the amount owed on the home, has decreased and accounted for 21% of home resales last month. That was down from 25% a month earlier. It was the lowest since the NAR began tracking the number in October 2008 as the foreclosure crisis escalated.
The slowdown in activity is coupled with new home construction picking up 7.0% in March to a 1.04 million-unit annual rate, the highest since 2008, the Commerce Department said last week.
However, the rise in starts was driven by the volatile multi-family sector and permits for future construction projects fell 3.9%.