The rate of sales of existing or previously occupied homes fell unexpectedly in March due to limited supply of inventory and tight credit-availability.
According to the sales report released by the National association of Realtors Monday, April 22, it was revealed that sales inched down 0.6 percent to an annually adjusted rate of 4.92 million homes. In a previous poll involving 66 experts conducted by Bloomberg, they forecast that sales of these homes would probably rise 0.4 percent, the highest since November 2009. However, the reality was far from the forecast.
The reason for the dwindling sales was attributed to constrained inventory supply. The number of distressed or foreclosed property fell to its lowest in March since the second quarter of 2007. Foreclosure filings were also down 12 percent from the previous quarter. This means more tight supply.
Meanwhile, prices of the homes are also sky rocketing. The median price of an existing home increased 11.8 percent. This was the highest recorded spike since November 2005, reports Bloomberg.
"The disappointing pace of home sales provides some evidence that positive momentum in the housing sector is beginning to leak lower," Millan Mulraine, a senior economist at TD Securities in New York, said to Reuters.
However, the report also included some positive points. Sales of the homes were up 10.3 percent from the figures of a year earlier. Moreover, inventory notched up just 0.1 percent, which is a very minuscule improvement.
Experts believe that more homes will come on the market in the coming few months as foreclosure filings or starts are bound to increase. According to a report by RealtyTrac.com, foreclosure starts increased 2 percent in March, rising for the second straight month.
"Despite some little turbulence, the residential housing market is still improving. We're in a transition mode where distressed sales are falling and conventional sales are growing, which means stagnation in total home sales. This situation is not problematic because it shows the market is returning to normal," Christophe Barraud, an economist at Market Securities-Kyte Group, said to Bloomberg.