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."
%VIRTUAL-article-sponsoredlinks%LaVorgna noted that the Realtors' group reported more buyer traffic at open houses last month, suggesting that demand is rising.
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.
9 Numbers That'll Tell You How the Economy's Really Doing
Existing Home Sales Hit 20-Month Low in March
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.