WASHINGTON: US home sales fell more than expected in March as rising demand stoked by declining mortgage rates and slowing house price inflation continued to be frustrated by a lack of properties, especially in the lower-priced segment of the market.
The report from the National Association of Realtors (NAR) on Monday could temper expectations of a strong spring selling season that had been bolstered by a recent surge in applications for loans to buy homes. The housing market continues to buck the broader economy, which has shown signs of gaining momentum after stumbling at the turn of the year, report agencies."Given mortgage rates have dropped and home prices aren't appreciating as quickly, there is more opportunity for home shoppers, who are gearing up for the spring season," said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. "The major problem for home buyers is the low supply of homes, especially at the lower end of the market."
Existing home sales dropped 4.9 percent to a seasonally adjusted annual rate of 5.21 million units last month. February's sales pace was revised down to 5.48 million units from the previously reported 5.51 million units. Sales fell in all four regions of the country last month.
Economists polled by Reuters had forecast existing home sales would fall 3.8 percent to a rate of 5.30 million units last month. Existing home sales, which make up about 90 percent of U.S. home sales, declined 5.4 percent from a year ago. That was the 13th straight year-on-year decrease in home sales.
Economists expect housing probably remained a drag on gross domestic product in the first quarter. Residential investment contracted in 2018, logging its weakest performance since 2010.
While lower borrowing costs and house prices as well as strengthening wage growth have improved affordability, land and labor shortages are making it difficult for builders to ramp up construction of relatively cheaper priced homes.