* Existing home sales dip 0.2 percent in March
* Sales tumble 7.5 percent from March last year
* Median home price rises 7.9 percent from year ago
(Adds details, new analyst comments, background)
By Lucia Mutikani
WASHINGTON, April 22 U.S. home resales fell to
their lowest level in more than 1-1/2 years in March, but there
were signs a recent downward trend that has plagued the housing
market may be drawing to an end.
The National Association of Realtors said on Tuesday
existing home sales slipped 0.2 percent to an annual rate of
4.59 million units.
Though that was the lowest level since July 2012, sales were
a bit stronger than economists had expected. There was also an
increase in supply and more first-time buyers entered the
market, key ingredients for a strengthening in activity.
A run-up in prices, which has reduced affordability, is also
starting to moderate.
"The negative housing momentum, which was exacerbated by
severe weather conditions during the winter months, may be
starting to fade," said Gennadiy Goldberg, an economist at TD
Securities in New York.
The March sales figures reflected purchase contracts signed
in January and February, when the country was in the grip of an
unusually cold and snowy winter. Sales peaked in July and have
declined in seven of the last eight months.
While the terrible weather has accounted for some of the
slump, a rise in mortgage rates and home prices, and a dearth of
properties on the market, also sidelined potential buyers.
Compared to March last year, sales were down 7.5 percent.
Minutes of the Federal Reserve's March 18-19 policy meeting
noted the softening in housing activity, with some officials
saying the jump in mortgage rates last year might have produced
a "larger than expected reduction in home sales."
The 30-year fixed mortgage rate, which peaked at 4.49
percent in September, averaged 4.34 percent in March. A year ago
it stood at 3.57 percent.
The Fed is dialing back the amount of money it pumps into
the economy through monthly bond purchases and is not seen
raising benchmark interest rates before the second half of 2015.
HOUSING TO WEIGH ON GROWTH
Residential construction has also cooled in recent months.
Investment in home building was a drag on growth in the fourth
quarter for the first time in three years, and it likely
undercut gross domestic product in the first quarter as well.
"It's a small share of GDP, but the weakness in home sales
was severe enough to be a material contributor to the slowing in
GDP growth in the first quarter," said Ted Wieseman, an
economist at Morgan Stanley in New York.
First-quarter growth is seen around a 1.5 percent annual
pace, a sharp slowdown from the 2.6 percent rate logged in the
fourth quarter of 2013.
While housing is lagging the economy's snap-back from a
winter-induced lull, it could be close to finding a bottom.
Leading housing market indicators such as contract signings
and mortgage applications are showing signs of stabilizing. Real
estate brokers are also seeing some signs of a pickup in demand.
Real estate brokerage firm Redfin reported new listings
across 19 markets rising in March on a year-ago basis.
"This first year-over-year growth in March in at least three
years should help sales in the coming months in inventory-hungry
and relatively affordable markets like Chicago, Philadelphia and
Seattle," said Redfin economist Ellen Haberle.
"The number of new customers contacting Redfin has grown to
an all-time high over the past several weeks, signaling that
demand is there, but many buyers remain sitting on the sidelines
until more options become available."
Buyers could soon have more options. The NAR said the
inventory of unsold homes on the market rose 4.7 percent from
February. With sales falling, the months' supply rose to an
11-month high of 5.2. A 6.0 months supply is normally considered
as a healthy balance between supply and demand.
First-time buyers accounted for 30 percent of the
transactions, the largest in a year and an increase from 28
percent in February. A market share of 40 percent to 45 percent
for first-time buyers is considered by economists and real
estate professionals as ideal.
With inventory still tight, the median price for a
previously owned home rose 7.9 percent from a year ago to a
six-month high. The pace of acceleration is, however, slowing.
A shortage of properties also means houses are being snapped
up quickly. About 37 percent of homes sold in March were on the
market for less than a month.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)