Sales of existing homes unexpectedly fell 0.6% to a seasonally adjusted annual rate of 4.92 million in March, the National Association of Realtors reported Monday. Analysts had been expecting an increase of 5.03 million homes. February existing home sales were revised down to 4.95 million from an original estimate of 4.98 million.

The numbers in March continue to point to a healthy housing recovery: existing home sales are up 10.3% compared to a year ago and the median home price in March ($184,300) is nearly 12% higher than it was in March 2012. Last month also marks the largest year-over-year price growth since November 2005.

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David Rosenberg, chief economist and strategist at Gluskin Sheff, says growth in the housing market could be slowing. He notes that first-time buyers are still hesitant about taking on mortgage debt and their absence from the market is the “missing link” in the recovery.

“Most of this recovery in the housing sector is probably behind us,” Rosenberg tells The Daily Ticker. Sales will “probably level off for the next several months” which is not “the worst thing in the world.”

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First-time buyers accounted for 30% of existing home sale purchases in March versus 33% just one year ago. Even with mortgage rates sitting at historical lows – the 30-year fixed rate was 3.57% in March – potential new buyers are choosing to sit on the sidelines as institutional investors and hedge funds briskly snap up available properties.

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First time buyers are an important piece of the housing puzzle, Rosenberg says, but Americans may also need to change their views on home ownership in general.

“Only in America is there a state of policy that we must have a 70% home ownership rate,” Rosenberg explains. “Expectations of housing as an investment have changed. The rental sector has been in a full-fledged boom and for good reason.”

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Rosenberg argues that any government involvement in the housing market to drum up demand would be ill-advised.

“The government influencing the banks to lend more money landed us in this situation” and there is no case for re-stimulating the market, he says. Homeowners are realizing that their house is "not the greatest investment in the world."

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