Sales of previously owned homes faded again in March as tight inventory continued to constrain markets across the country, driving up real estate values.
Total existing-home sales – completed transactions including single-family homes, townhomes, condos, and co-ops – declined almost 1 percent from February, but remained more than 10 percent above levels reported in March 2012, the National Association of Realtors reported Monday.
Economists blamed a continuing market imbalance for the month-over-month pullback, noting buyer traffic is 25 percent above levels reported this time last year, while the inventory of homes for sale continues to dwindle in many markets.
Total housing inventory inched up slightly in March to a 4.7-month supply at current sales rates, but the number of homes listed for sale is still almost 17 percent less than a year ago, NAR noted.
"The inventory improvement [in March] results from a seasonal gain, but conditions continue to broadly favor sellers," NAR Chief Economist Lawrence Yun said in a statement. "We need a housing supply of over 6 months to have a generally balanced market between home buyers and sellers, but it's unlikely we'll get there without greater increases in housing construction."
Rising home prices have made would-be sellers increasingly hesitant to put their homes on the market as they wait for prices to jump up further. According to NAR, the national median existing-home price was $184,300 in March, almost 12 percent higher than March 2012, and the strongest increase since November 2005 when prices rose almost 13 percent year-over-year.
"Some potential sellers appear to be waiting in the wings for some of the price bounce-back to what their property used to be worth," Michael Montgomery, an economist at financial analytics firm IHS Global Insight, wrote in a client note Monday.
The dwindling number of foreclosures and short sales has also contributed to the dearth of housing inventory. Distressed homes accounted for about 21 percent of all sales in March according to NAR, down from about 25 percent in February and almost 30 percent in March 2012.
Still, there is hope that increasing housing demand will fuel the building boom needed to ease inventory constraints. New home construction surged to its highest level in March, the Commerce Department reported last week, and low mortgage rates continue to keep homeownership affordable.
That is, if househunters can get a mortgage. Credit standards remain "excessively tight" according to NAR's Yun, squeezing out potential homebuyers, while rents continue to trend upward.