WASHINGTON -- 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 Northeast and Midwest, suggesting that cold winter weather did not weigh as heavily on sales as in previous months. Freezing temperatures and snowstorms had contributed to lower sales in January and February.
"Sales appear to be stabilizing following earlier weather-related disruptions," Joseph LaVorgna, an economist at Deutsche Bank (DB), said in a note to clients. "We expect sales to improve as we enter the crux of the spring selling season."
Still, big price increases in the past year, along with higher mortgage rates, have made it harder for many Americans to afford a home. Pay increases haven't kept up with the higher buying costs.
Those trends and harsh weather have dragged down sales since last fall.
Sales fell last month in the West and South, where prices have risen the most in the past year. Price increases were smaller in the Northeast and Midwest.
Nationwide, the median sales price last month was $198,500, up 7.9 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 (CLGX) 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.
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.
About 5.1 million homes changed hands last year, the most in seven years. But that's still below the 5.5 million that reflect a healthy market. Many economists expect sales to rise modestly this year but to remain below the 5.5 million level.
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's 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.