WASHINGTON, March 18 — Sales of existing homes dropped sharply in the United States last month as buyers struggled to afford homes that remained scarce, an industry survey said today.

The National Association of Realtors (NAR) reported existing home sales dropped 7.2 per cent in February to a seasonally adjusted annual rate of 6.02 million, a larger fall than analysts had expected.

"Housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases,” NAR Chief Economist Lawrence Yun said.

"Some who had previously qualified at a three per cent mortgage rate are no longer able to buy at the four per cent rate.”

The supply of homes for sales ticked up 2.4 per cent last month to a 1.7-month supply at the current pace of sales, up from the record low recorded in January but nonetheless a tight market, NAR said.

The median existing home price continued to rise to US$357,300, up 15 per cent from the same month in 2021.

"The sharp jump in mortgage rates and increasing inflation is taking a heavy toll on consumers’ savings,” Yun said.

"However, I expect the pace of price appreciation to slow as demand cools and as supply improves somewhat due to more home construction.”

All regions saw sales decrease, with business in the Northeast dipping 11.5 per cent and the Midwest falling nearly the same amount.

Sales dipped 5.1 per cent in the South and 4.7 per cent in the West, the survey said.

Nancy Vanden Houten of Oxford Economics said existing home sales are likely to fall further as more buyers are priced out of the market.

"Resilient demand and strong income gains should keep a floor under home sales, however, particularly if home price growth moderates,” she said in an analysis. — AFP