U.S. existing home sales fell 2.6 percent in March to an annual rate of 4.48 million, the National Association of Realtors said Thursday, missing expectations and highlighting continued weakness in the housing market.

Sales were down from an upwardly revised annual rate of 4.6 million in February and below a Reuters forecast of 4.62 million. In March 2011, the annual pace was 4.26 million units.

“The recovery is happening though not at a breakout pace, but we have seen nine consecutive months of year-over-year sales increases,” said Lawrence Yun, NAR chief economist. “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.”

Total inventory fell 1.3 percent to 2.37 million homes on the market, a supply of 6.3 months at the current sales pace, unchanged from February. Inventory is down 21.8 percent from the prior year and below the peak of 4.04 million homes on the market in July 2007. Although fewer homes for sale can indicate that transactions have increased, a lack of selection can also weaken future sales.

“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.

The median sales price was $163,800 in March, up 2.5 percent from the prior year. Foreclosures and short sales accounted for 29 percent of March sales, down from 34 percent in February and 40 percent in March 2011. Foreclosures sold for around 19 percent below non-distressed properties, and short sales were 16 percent below.

Investors accounted for 21 percent of March sales, down from 23 percent in February and 22 percent in March 2011. First-time home buyers were 33 percent of the market, up slightly from 32 percent in February and unchanged year-over-year.

Northeast March sales were down 1.7 percent compared to February, but up 5.5 percent year-over-year. Northeast pricing was down 1.9 percent from the prior year. Sales in the south fell 1.1 percent over the month and were up 3.6 percent from the past year. The median price in the south was up 6.2 percent year-over-year.

Western sales were down 7.4 percent month-over-month but up 0.9 percent year-over-year. Pricing rose 1.6 percent from 2011. Midwest sales were flat in March and up 15.9 percent from the previous year. Prices were up 5.2 percent annually.