WASHINGTON – Sales of previously owned homes edged up slightly in March but not enough to keep the inventory of unsold homes from hitting a record high as the once-booming housing market continued to flash signals of a slowdown.
The National Association of Realtors said Tuesday that sales of existing homes edged up a tiny 0.3 percent last month to a seasonally adjusted annual rate of 6.92 million units.
The March increase followed a bigger 5.1 percent jump in February with the two months representing the first advances since five consecutive monthly declines.
The median price of a new home rose to $218,000 last month, a gain of 7.4 percent from a year ago. That price increase was far slower than the double-digit gains turned in last year as the housing boom was peaking.
Analysts said that so far this year home sales are running 4 percent below the pace set in 2005, a year in which home sales set a record for a fifth straight year. Analysts believe that rising interest rates will result in a drop in sales of existing homes of around 6 percent this year as the five-year boom in housing slows.
The big question is whether the slowdown is gradual or something more severe which could trigger plunging home prices.
David Lereah, chief economist for the Realtors, said the sales increases over the past two months were a hopeful sign that sales will experience only a slight drop-off this year.
"This is additional evidence that we're experiencing a soft landing," he said. "The market clearly is stabilizing."
By region of the country, sales were up 1.7 percent in the Northeast and 1.2 percent in the Midwest but fell 0.7 percent in both the South and the West.
The inventory of unsold homes rose to 3.19 million units at the end of March, which was the highest total on record. That inventory represented a 5.5-month supply of homes at the March sales pace, which represented the longest period needed to exhaust the inventory since it stood at a 5.6-month supply in July 1998.
Lereah said that the report continued to show a tale of two cities with areas that had been booming experiencing sales slowdowns while more moderate growth regions were still experiencing strong gains.
He said that Houston, Cincinnati, Ohio, and Albuquerque, N.M., were still experiencing strong sales gains while Fort Lauderdale, Fla., Phoenix and the San Fernando Valley of California were seeing a slowdown in sales.