Record low inventories and surging prices pushed buyers out of the US housing market in March and caused existing home sales to decline for the second straight month, an industry survey said on Thursday.

Existing home sales fell 3.7 percent to a seasonally adjusted annual rate of 6.01 million last month, the National Association of Realtors (NAR) said, with every region reporting declines.

While bad winter weather played a role in the 6.6 percent shortfall seen in February, analysts blamed March's underperformance on the rise in median sales price to a historic high of $329,100, with properties only remaining on the market an average of 18 days, a record low.

"So much for the idea that February home sales were hit so hard by the severe mid-month storm that March just had to bring a rebound," Ian Shepherdson of Pantheon Macroeconomics said.

"The storm didn't help in February, but any rebound was more than offset by the much bigger problem for the housing market, which is that mortgage demand has tanked in recent months."

The housing market was one of the fastest recovering sectors of the economy after the Covid-19 pandemic caused a historic downturn beginning in March 2020, aided by cheap mortgages after the Federal Reserve slashed its benchmark lending rate to zero.

Sales were overall up 12.3 percent from the same month one year ago, but March's decline in the sales pace put it back to the level of August 2020.

US existing homes remained on the market an average of 18 days in March, a record low, according to the National Association of Realtors
US existing homes remained on the market an average of 18 days in March, a record low, according to the National Association of Realtors GETTY IMAGES NORTH AMERICA / JOE RAEDLE

However prices were 17.2 percent higher than last March, gaining for the 109th straight month, while inventory was more than 28 percent lower than a year ago at 1.07 million units as of the end of last month.

Unsold inventory was a smidgen higher than February 2021 at a 2.1-month supply at the current rate of sales, but lower than the 3.3-month supply of March 2020.

"The sales for March would have been measurably higher, had there been more inventory," NAR Chief Economist Lawrence Yun said, predicting the sector would see better supply and more demand in the future.

Shepherdson however said the dynamics of the housing sector were divorced from the US economy's overall recovery from the pandemic downturn, while predicting that "sales have a good deal further to fall, though we remain hopeful that the second half of the year will bring an improvement."

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