Sales of previously owned homes fell in March for the third consecutive month as rising prices and cold weather discouraged would-be buyers.
Closings, which typically take place a month or two after a contract is signed, fell 0.2% to a 4.59 million annual rate, the lowest level since July 2012, the National Association of Realtors reported today in Washington. The median forecast of 75 economists surveyed by Bloomberg called for sales to slow to a 4.56 million annual rate.
Rising home prices have outpaced wage growth, putting ownership out of reach for some Americans. Mortgage rates, while still near historic lows, have been rising and harsh winter weather in January and February probably prevented would-be new owners from venturing out to look for real estate.
"We won't see a spring pickup in existing home sales until maybe May or June when contracts signed in March and April get to the closing table," Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, said before the report. "Early indicators such as mortgage applications are showing quite a robust pickup in the last five weeks."
Stocks held earlier gains after the report. The Standard & Poor's 500 Index climbed 0.4% to 1,879.21 at 10:10 a.m. in New York.
Estimates in the Bloomberg survey ranged from 4.5 million to 4.85 million. February's pace was unrevised at 4.6 million.
"Sales may be stabilizing," Lawrence Yun, NAR chief economist, told reporters as the figures were released. "I do expect some spring bounce in the upcoming months."
The median price of an existing home climbed 7.9% from March 2013 to $198,500, today's report showed.
At the current sales pace, it would take 5.2 months to sell houses compared with 5 months at the end of February. That still constitutes a "tight" market that favors sellers over buyers, Yun said.
While existing home sales have improved since hitting a low pace of 3.45 million in July 2010, rising interest rates and higher prices have pushed transactions down from a post-recession high of 5.38 million reached in July 2013.
The average rate on a 30-year, fixed mortgage fell to a six-week low of 4.34% in the week ended April 17. A year ago, the rate averaged 3.41%, according to Freddie Mac.
Work began on fewer new homes than forecast in March, Commerce Department data showed last week. Builders also have fewer houses in the pipeline, with the number of permits declining 2.4% last month.
Housing's slow recovery is being felt by mortgage lenders, many of which have cut staffing. Since the beginning of the year, Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. have eliminated workers in their mortgage divisions.
At PNC Financial Services Group, loans used to buy homes fell to $1.9 billion in the first quarter compared to $4.2 billion a year earlier, Chief Financial Officer Rob Reilly said. Total revenue for the Pittsburgh-based bank could fall this year in part because of reduced demand for mortgages, he said.
"We announced expense reductions in residential mortgage during the fourth quarter of last year and we have fully captured those savings," Reilly said on an April 16 earnings call. "In this environment, we will remain focused on disciplined expense management."