The pace of existing home sales in the United States picked up by 0.3 percent in March, defying expectations for a slowdown, due to increased buying in some less expensive markets and in part to warm weather, a trade group said on Tuesday.
Sales of existing U.S. homes rose to a 6.92 million-unit rate in March from February's downwardly revised 6.90 million-unit pace, according to the National Association of Realtors. The existing home sales figure includes both single-family homes and condos.
Analysts had expected home resales to slow to a 6.7 million-unit rate from February's originally reported 6.91 million-unit pace due to rising mortgage rates that have made purchases less affordable.
While the Realtors' chief economist called the rise in existing home sales encouraging, he said it was probably not sustainable given rising mortgage rates.
I think this steadiness we've seen in the last two months can't be sustained because mortgage rates have risen further since, said David Lereah, the group's economist. So I do see some more modest drops in home sales.
According to data from mortgage finance company Freddie Mac (NYSE:FRE - news), which was cited by the Realtors, 30-year fixed-rate mortgages averaged 6.32 percent in March, up from 6.25 percent in February.
For the first quarter, the pace of home resales is 2 percent slower than the first three months of 2005 and 4 percent slower than the pace posted for all of last year, the Realtors said.
The rise in total sales in March was driven by a 0.3 percent increase in single-family home sales and a 0.2 percent gain in condo sales.
Inventories soared 7 percent in March, leaving a record 3.19 million existing homes available for sale at the end of the month. That equates to 5.5 months' supply at the current sales pace, the largest inventory since July 1998, when supply equaled 5.6 months' worth.
Price appreciation also has weakened, with the national median home price up 7.4 percent from a year ago to $218,000. That is far from the double-digit gains posted in previous months.
Rising oil prices and borrowing costs pose risks to the housing market, Lereah said.
He said some housing markets are more vulnerable to interest-rate rises than others due to the more widespread use of adjustable-rate mortgages to attain affordability.