Sales of existing homes declined 0.2 percent from February to March, matching a 20-month low with a 4.59 million-unit annual sales rate and falling 7.5 percent below the March 2013 pace. Shrinking inventories caused home prices to increase 7.9 percent year-over-year, deflating demand among first-time buyers, who have also been slowed by strict mortgage requirements.

Existing home sales refused to bounce back in March from a nearly two-year low in February, according to an April 22 report from the National Association of Realtors. Sales declined 0.2 percent to a seasonally adjusted annual rate of 4.59 million units in March, down from 4.60 million the month before.

Total existing home sales were 7.5 percent below the 4.96 million-unit pace in March 2013. Single-family home sales were unchanged at a seasonally adjusted annual rate of 4.04 million in March, the same as February, but are 7.3 percent below the 4.36 million pace a year ago.

Lawrence Yun, NAR chief economist, said that sales activity is underperforming by historical standards. "There really should be stronger levels of home sales given our population growth," he said. "In contrast, price growth is rising faster than historical norms because of inventory shortages."

Yun expects some improvement in the months ahead. "With ongoing job creation and some weather delayed shopping activity, home sales should pick up, especially if inventory continues to improve and mortgage interest rates rise only modestly."

Housing inventory rose 4.7 percent at the end of March to 1.99 million existing homes available for sale, representing a 5.2-month supply at the current sales pace, up from 5.0 months in February. Unsold inventory is 3.1 percent higher than a year ago, when there was a 4.7-month supply.

The median existing-home price for all housing types in March was $198,500, up 7.9 percent from March 2013. The median existing single-family home price was $198,200 in March, which is 7.4 percent above March 2013.

NAR President Steve Brown said first-time buyers have been stuck in a rut. "There are indications that the stringent mortgage underwriting standards are beginning to ease a bit, particularly regarding credit score requirements, but they remain a headwind for entry-level and single-income home buyers," he said. rising new-home construction means some owners will be trading up and more existing homes will be added to the inventory. Hopefully, this will create more opportunities for first-time buyers."

"We also have tight inventory in the lower price ranges where many starter homes are found," but Brown said.

Existing condominium and co-op sales declined 1.8 percent to an annual rate of 550,000 units in March from 560,000 in February, and are 8.3 percent below the 600,000 level in March 2013. The median existing condo price was $200,800 in March, up 11.6 percent from a year ago.