Existing home sales slow further as weak supply chokes off the US housing boom

• Sales of previously owned homes fell 3.7% in March to an annual rate of 6 million units.
• Inventory crept higher to 1.07 million units but remains close to historically low levels.
• The supply-demand imbalance continued to lift prices, with the median price climbing 17.2% year-over-year.

Home purchases stumbled further in March as the record imbalance between supply and demand cut further into buying activity.

Existing-home sales fell 3.7% in March to a seasonally adjusted annual rate of 6 million units, the National Association of Realtors said on Thursday. The median estimate from economists surveyed by Bloomberg was for a smaller decline, to a rate of 6.11 million.

The February rate was revised slightly higher to 6.24 million units. The sales rate for previously owned homes now sits at its lowest level since August after two consecutive declines.

The median selling price for existing homes leaped 17.2% from the year-ago period to a record high of $329,100, according to NAR. Home prices have repeatedly hit record highs this year as the lack of sufficient supply has lead owners to demand more when they put their houses up for sale.

Homes spent just 18 days on the market on average, according to NAR. That's down from 20 days in February and 29 days in March 2020. About 83% of homes sold last month were on the market for less than one month, underscoring the fervor of the nationwide buying spree.

Inventory edged higher last month, but remains at historically low levels as construction just starts to pick up. Supply reached 1.07 million units by the end of March, up from 1.03 million in February. That level sits 28.2% lower from the year-ago period and represents just 2.1 months of supply should sales continue at their current pace.

"The sales for March would have been measurably higher, had there been more inventory," Lawrence Yun, chief economist at NAR, said in a statement. "Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising."

The lingering imbalance and its effect on home prices stands to further widen the US wealth gap, Yun added. The US housing market was among the few corners of the economy to see rapid appreciation since the pandemic hit in early 2020. Soaring home prices have boosted the wealth of US homeowners, but it leaves renters struggling to buy homes of their own, the economist said.

Contractors are rushing to address that imbalance at breakneck pace. Housing starts soared nearly 20% in March to their highest level since 2006, according to Census Bureau data published last week. The pace of home construction can accelerate further through the year as more millennials reach their peak homebuying age and lumber prices reverse their recent upswing, Jefferies analysts said in a recent note.

At the same time, mortgage rates have edged lower in recent weeks, easing some financial pressures for potential homebuyers. The average 30-year fixed mortgage rate slid to 2.97% this week, Freddie Mac said Thursday. The reading is the first to land below 3% since February.

New-home sales data for March is slated to be published on Friday. Those sales count for roughly 10% of housing-market activity, with sales of previously owned homes making up the vast majority of activity.