Existing home sales decreased in March to a seasonally adjusted annual rate of 4.48 million units, 2.6 percent below the February pace which was adjusted up to 4.60 million units from the original estimate of 4.59 million.  The March rate is 5.2 percent higher than the 4.26 million unit rate of sales in March 2011.

The figures were released this morning by the National Association of Realtors® (NAR) which defines existing home sales as completed transactions that include single-family homes, townhomes, condominiums, and cooperative apartments.  NAR pointed out that while sales were down, inventory tightened and home prices are showing further signs of stabilizing.

Lawrence Yun, NAR chief economist, said the recovery is in the process of settling into a higher level of home sales.  "The recovery is happening though not at a breakout pace, but we have seen nine consecutive months of year-over-year sales increases," he said.  "Existing-home sales are moving up and down in a fairly narrow range that is well above the level of activity during the first half of last year.  With job growth, low interest rates, bargain home prices and an improving economy, the pent-up demand is coming to market and we expect housing to be notably better this year."

Sales of existing homes took a sudden jump in January but have trended down since then on a seasonally adjusted basis.  Still, as NAR points out, there has been fairly steady attrition in the inventory of homes for sale which now stands at a 6.3 month supply of 2.37 million homes down 1.3 percent from 2.4 million in February and 21.8 percent below the 3.03 million unit inventory, an 8.5 month supply, one year earlier. 

 "We were expecting a seasonal increase in home listings, but a lack of inventory has suddenly become an issue in several markets with not enough homes for sale in relation to buyer interest," Yun said.  "Home sales could be held back because of supply factors and not by demand - we're already seeing this in the Western states and in South Florida."

Single-family home sales were down 2.5 percent in March compared to February at an annual rate of 3.97 million units.  February single-family home sales were revised up from 4.06 million to 4.07 million.  Single-family sales in March were 5.9 percent above sales of 3.75 million in March 2011. Existing condominium and co-op sales fell 3.8 percent to a seasonally adjusted annual rate of 510,000 in March from 530,000 in February, and are unchanged from March 2011. 

The median price for all house types rose 2.5 percent on an annual basis from $159,800 in March 2011 to $163,800 last month.  The average price increased from 207,300 to 211,400.  Foreclosed homes which accounted for 18 percent of the market typically sold at a discount of 19 percent while short sales, 11 percent of the market in March, were discounted an average of 16 percent.

The median single-family house was priced at 163,600 compared to 160,600 a year earlier, a 1.9 percent increase while the average price rose 1.5 percent from 208,300 to 211,500.  Condominium prices are up fairly strongly with the median existing condo price rising 7.1 percent from $154,200 in March 2011 to $165,200 and the average increasing 5.1 percent from 200,700 to 210,900.

Investors purchased 21 percent of the homes that sold in March compared to 23 percent in February and 22 percent a year earlier and first time buyers accounted for 33 percent of transactions virtually unchanged from the two earlier periods.  All-cash sales slipped to 32 percent of transactions in March from 33 percent in February; they were 35 percent in March 2011.  Investors account for the bulk of cash transactions.

Regionally, existing-home sales in the Northeast declined 1.7 percent to an annual level of 580,000 in March but are 5.5 percent higher than a year ago.  The median price in the Northeast was $228,300, down 1.9 percent on an annual basis.

Existing-home sales in the Midwest were unchanged in March at a pace of 1.02 million but are 15.9 percent above March 2011.  The median price in the Midwest was $132,800, up 5.2 percent from a year ago.

In the South, existing-home sales slipped 1.1 percent to an annual level of 1.75 million in March but are 3.6 percent higher than a year ago.  The median price in the South rose 6.2 percent to $146,500.

Existing-home sales in the West fell 7.4 percent to an annual pace of 1.13 million in March and are 0.9 percent below March 2011.  The median price in the West was $198,300, up 1.6 percent from a year ago.