WASHINGTON, April 23 (Reuters) - U.S. home sales increased strongly in March amid a rebound in activity in the Northeast and Midwest regions, but a dearth of houses on the market and higher prices remain headwinds as the spring selling season kicks off.
The National Association of Realtors said on Monday that existing home sales rose 1.1 percent to a seasonally adjusted annual rate of 5.60 million units last month. February’s sales pace was unrevised.
It was second straight monthly increase in existing home sales, which account for about 90 percent of U.S. home sales.
Existing home sales fell 1.2 percent on a year-on-year basis in March.
Last month, sales surged 6.3 percent in the Northeast and jumped 5.7 percent in the Midwest, after being weighed down by bad weather in February. They slipped 0.4 percent in the South, where the bulk of sales activity occurs, and fell 3.1 percent in the West.
There is an acute shortage of homes, especially at the lower end of the market. The resulting higher house prices and rising mortgage rates are a constraint for first-time buyers, who have been largely priced out of the market.
Economists believe some undecided buyers are rushing into the market to close contracts, fearful of further increases in home prices and mortgage rates.
The 30-year fixed mortgage rate averaged 4.47 percent last week, the highest level since January 2014, from 4.42 percent the previous week, according to mortgage finance agency Freddie Mac.
The number of previously owned homes on the market rose 5.7 percent to 1.67 million units in March. Housing inventory was down 7.2 percent from a year ago. Supply has declined for 34 straight months on a year-on-year basis.
At March’s sales pace, it would take 3.6 months to exhaust the current inventory, up from 3.4 months in February. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.
The median house price increased 5.8 percent from a year ago to $250,400 in March. That was the 73rd consecutive month of year-on-year price gains. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)