Home sales in March slowed down for the second straight month this year, while median home prices reached a new high.

Existing home sales fell 3.7% to a seasonally adjusted 6.01 million in March, from a month earlier, according to the National Association of Realtors (NAR), which revised February existing home sales to 6.24 million. The results far exceeded the expected 1.8% decline, according to Bloomberg consensus estimates. Despite the decline, sales were still higher by 12.3% from the same month last year and the annualized pace of 6.1 million far exceeds the total of 5.6 million sales for the entire year of 2020.

“Softening sales activity is not due to demand going away, demand is strong. The severe lack of supply is holding back sales conditions,” said Lawrence Yun, NAR chief economist, during a press call prior to the release of the results. “If demand was retreating then we wouldn’t see multiple offers (we know that’s widely prevalent), home price growth should be decelerating (it is accelerating) and inventory should be staying market for longer period. That’s not happening.”

The slowdown was anticipated since sales lag pending home sales, which has been falling since the beginning of the year. Pending home sales in March is is expected to be released on April 29.

"Sales of existing homes were relatively cool in March as the impact of February’s adverse weather and sluggish listing activity to start the year continued to trickle through the market," said Zillow Economist Matthew Speakman, in a press statement. "Existing home sales are measured at the time of closing, rather than contract signing, so March’s numbers partially reflect market activity that took place in February — when new listing activity was particularly sluggish in the face of ongoing pandemic anxiety and harsh winter weather."

Median existing home prices surged to a new high of $329,100 in March, up 17.2% from the same time a year ago — an all-time high and the fastest pace of growth since NAR started tracking media prices in 1999. Due to the results, Yun noted that we should expect to see the S&P CoreLogic Case-Shiller national home price index post further increases in coming months.

Total housing inventory at the end of March hit 1.07 million units, up 3.9% from February’s inventory and down 28.2% from one year ago — near historic lows. Unsold inventory sits at a 2.1-month supply at the current sales pace, marginally up from February’s 2.0-month supply and down from the 3.3-month supply recorded in March 2020.

Inventory was up slightly due to seasonal trends and latest housing starts data further signal inventory to pick up in the coming months, according to Yun.

“Brokers and realtors across the country said that if you had 25% more inventory you would have 20% more sales,” said Yun. “The lack of inventory ... is hindering sales activity.”

Amanda Fung is an editor at Yahoo Finance.

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