The traditional spring buying season started with a modest increase in pending home sales, according to the National Association of Realtors. However, the rate of pending sales also dropped from the previous year for the third month in a row.

The Pending Home Sales Index stood at 107.6, up 0.4 percent from February's downwardly revised figure of 107.2. The index was down 3 percent from March 2017.

The Pending Home Sales Index tracks transactions where a contract has been signed but the sale has not closed. This action typically takes place within one or two months, making the index a good forward-looking indicator of sales activity. A figure of 100 is equal to the average sales activity in 2001, when the volume of existing home sales fell between 5 million and 5.5 million, a pace considered normal for the current population of the United States.

"Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory," said Lawrence Yun, chief economist at the National Association of Realtors. "Steady price growth and the swift pace listings are coming off the market are proof that more supply is needed to fully satisfy demand. What continues to hold back sales is the fact that prospective buyers are increasingly having difficulty finding an affordable home to buy."

Yun has frequently raised the issue of limited inventory in recent years, saying this condition contributes to fiercer competition for affordable homes and home price appreciation which often exceeds wage growth. The most recent existing home sales report from the National Association of Realtors indicates that inventory has been shrinking on a year-over-year basis for 34 consecutive months.

In addition, home prices have been increasing for 73 straight months, reaching a median of $250,400 in March. The typical home sold during the month had been listed for 30 days before finding a buyer.

"Much of the country is enjoying a thriving job market, but buying a home is becoming more expensive," said Yun. "That is why it is absolute necessity for there to be a large increase in new and existing homes available for sale in coming months to moderate home price growth. Otherwise, sales will remain stuck in this holding pattern and a growing share of would-be buyers—especially first-time buyers—will be left on the sidelines."

In the Northeast, the Pending Home Sales Index dropped 5.6 percent from the previous month and 8.1 percent from the previous year to 90.6. Yun said winter storms and chilly temperatures likely helped stymie sales in this region, which includes the New England states as well as New Jersey, New York, and Pennsylvania.

The South was the only region with an overall increase in pending sales. Its index of 128.6 marked an increase of 2.5 percent from February and 0.3 percent from March 2017.

In the Midwest, pending sales were up 2.4 percent to an index of 101.3, but this was still a year-over-year decline of 6 percent. In the West, the index fell 1.1 percent from the previous month and 2.2 percent from the previous year to 94.7.

Yun is forecasting that existing home sales in 2018 will total approximately 5.61 million, which would be a 1.8 percent increase from the 2017 total of 5.51 million. He also expects the median price for an existing home in the U.S. to climb by about 4.4 percent.

In 2017, existing home sales increased by 1.1 percent while the median home price was up 5.8 percent.