Sales of existing homes, held down by the impact of rising mortgage rates, dropped for the third straight month in March to the slowest pace in more than a year, a real estate trade group reports.
The National Association of Realtors said sales of existing single-family homes declined 4.3 percent to a seasonally adjusted annual rate of 3.33 million units in March, following drops of 2 percent in February and 9.4 percent in January.It was the first time sales had declined for three straight months since sales dropped from November 1987 through January 1988, and represented the slowest resale pace since February 1988, the Realtors reported.
The government reported last week that construction of new homes and apartments declined 5.4 percent in March, the second straight monthly decline.
The weakness in housing is being blamed on high interest rates, with fixed-rate home mortgages averaging between 10.86 percent and 11.22 percent in March, according to the Federal Home Loan Mortgage Corp. Average rates a year earlier had been a percentage point lower.
"Fist-time buyers are simply locked out of the market by unaffordable financing," said Ira Gribin, president of the Realtors. "Generally, when rates are up, they are the first to leave the market and the last who are able to get back in."
With fewer sales last month to first-time buyers, the median price of existing homes sold rose $1,200 to $93,100, meaning half the homes sold for more and half for less.
"What we are seeing is definitely a trade-up market," said John A. Tuccillo, chief economist for the Realtors. "People still in the market are those with the incomes to withstand higher monthly mortgage payments resulting from higher interest rates."
By region, the sharpest decline in home sales last month was in the Northeast, where the resale pace was down 10 percent to a seasonally adjusted annual rate of 540,000 units. Sales in the Northeast had declined 15.5 percent during February.
Sales last month were down 7.6 percent in the Midwest to an annual rate of 850,000 units and fell 3.1 percent in the South to a rate of 1.27 million units. The only increase was recorded in the West, where sales rose 4.7 percent to an annual rate of 670,000 units.