WASHINGTON (AP) — Sales of existing US homes fell in March after a huge gain the previous month, held back partly by a sharp slowdown among the most expensive properties.
The National Association of Realtors said Monday that home sales fell 4.9 percent to a seasonally adjusted annual rate of 5.21 million, down from 5.48 million in February. The drop followed an 11.2 percent gain the previous month, the largest in more than three years.
Home sales are struggling to rebound after slumping in the second half of last year, when a jump in mortgage rates to nearly 5 percent discouraged many would-be buyers.
Realtors expect sales to rebound in the coming months. Borrowing costs have since fallen back to an average of 4.2 percent on a 30-year fixed mortgage. And solid hiring is pushing employers to pay higher wages, making it easier for more Americans to afford a home purchase.
Applications for mortgages to purchase homes have been running at a healthy pace in recent months, evidence that final sales should pick up in the coming months. Demand remains strong, with homes on the market for an average due partly to the Trump administration’s tax cut law. Sales increased slightly among midpriced homes but fell sharply among homes priced at $1 million or more.
Lawrence Yun, chief economist at NAR, said that the tax changes have limited the ability of wealthier homeowners to deduct mortgage interest payments and property taxes and that is discouraging sales of more expensive homes.
Developers have built more expensive homes in recent years while pulling back from less costly properties, even as middle-income Americans are eager to buy.
‘‘The lower-end market is hot, while the upper-end market is not,’’ Yun said.
The broader US economy is looking much better now than it did a couple of months ago, when the government shutdown, slumping retail sales, and slower global growth threatened to drag down the US economy.
“Sales have been volatile in 2019 thus far, but the average for the first three months of the year is around 5 percent lower than in 2018,’’ said Joel Kan, associate vice president of economic and industry forecasting for the Mortgage Bankers Association. “We had expected this to be stronger, given the solid economy and job market, but the high end of the market has started to cool off, and the lower price tiers are still hampered by a lack of availability.
The first-time home buyer share of sales was 33 percent, a slight improvement from 32 percent in February,’’ Kan said. “Limited inventory of entry-level homes continues to slow would-be first-timers, but lower mortgage rates and moderating home-price growth should continue to support home sales in the coming months. We expect sales to pick up as long as more inventory comes onto the market.’’
Earlier this year, economists forecast growth could fall to as low as 0.5 percent at an annual rate in the first three months of the year. Now analysts expect the government on Friday could report growth as high as 2.8 percent.