The pace of existing home sales plunged in March, according to the National Association of Realtors. The drop partially reversed a strong uptick in sales observed in February.

The seasonally adjusted annual rate of sales—including single-family homes, condominiums, co-ops, and townhomes—fell 4.9 percent from the previous month to 5.21 million. This also marked a year-over-year decline of 5.4 percent, the 13th straight month of annual decreases.

Lawrence Yun, chief economist at the National Association of Realtors, attributed some of the slowdown to a sizable increase in existing home sales in February. In that month, the annual pace shot up 11.8 percent from January.

"It's not surprising to see a retreat after a powerful surge in sales in the previous month," said Yun. "Still, current sales activity is underperforming in relation to the strength in the jobs markets. The impact of lower mortgage rates has not yet been fully realized."

According to Freddie Mac, the average rate for a 30-year fixed rate mortgage in March was 4.27 percent. This was down from the average rate of 4.37 percent in February and 4.54 percent in March 2018.

Buyers also continued to benefit from an increasing availability of homes. There were 1.68 million homes listed for sale at the end of March, up from 1.63 million in the previous month and 1.64 million in the previous year.

"Further increases in inventory are highly desirable to keep home prices in check," said Yun. "The sustained steady gains in home sales can occur when home price appreciation grows at roughly the same pace as wage growth."

"We had been calling for additional inventory, so I am pleased to see that there has been a modest increase on that front," said John Smaby, president of the National Association of Realtors. "We're also seeing very favorable mortgage rates, so now would be a great time for those buyers who may have been waiting to make a purchase."

Home prices have been growing on an annual basis for 85 straight months. In March, the median price for an existing home was $259,400 – a year-over-year gain of 3.8 percent.

Single-family home sales were at a seasonally adjusted annual rate of 4.67 million, down from 4.91 million in the previous month and 4.9 million in the previous year. The median price for this type of home was $261,100, up 3.8 percent from the previous year.

Condominiums and co-ops were selling at an annual rate of 540,000 units, dropping 5.3 percent from February and 11.5 percent from March 2018. The median price for this type of home increased 3.6 percent from the previous year to $244,400.

Lower-priced homes have been in higher demand and shorter supply. Yun, who has frequently advocated for the construction of more affordable homes to meet this demand, says the housing market will be further complicated by changes in tax policy.

"The lower-end market is hot while the upper-end market is not," he said. "The expensive home market will experience challenges due to the curtailment of tax deductions of mortgage interest payments and property taxes."

The average home sold in March had been on the market for 36 days, six days slower than in March 2018 but eight days faster than in February. Forty-seven percent of homes sold in March had been listed for less than a month before finding a buyer.

Thirty-three percent of homes sold in March went to people purchasing their first residence. This share was up from 32 percent in the previous month and 30 percent in the previous year.

Twenty-one percent of sales went to buyers who did not use financing, up from 20 percent in March 2018 but down from 23 percent in February. Individual investors, who make up a large share of these all-cash sales, accounted for 18 percent of the sales in March – up from 16 percent in both the previous month and previous year.

Three percent of the month's transactions were distressed sales, with foreclosures accounting for 2 percent of all sales and short sales making up just 1 percent. This share was down from 4 percent in both February and March 2018.

Existing home sales were down in each of four geographical regions identified by the National Association of Realtors. In the Northeast, the seasonally adjusted annual sales rate of 670,000 was down 2.9 percent from February and 1.5 percent from March 2018. The median price for a home in the region increased 2.5 percent from the previous year to $277,500.

The Midwest had the strongest annual price growth, with the median price for a home sold in March growing 4.6 percent to $200,500. However, the region also had the sharpest monthly decrease in sales, with the annual rate falling 7.9 percent from February and 8.6 percent from March 2018 to 1.17 million.

The West had the most pronounced annual decline in sales, with its rate of 1.09 million marking a 10.7 percent decrease from the previous year and a 6 percent drop from the previous month. The median price for a home sold in the region was $389,300, a year-over-year increase of 3.1 percent.

In the South, the annual sales rate fell 3.4 percent from the previous month and 2.1 percent from the previous year to 2.28 million. The median price for a home in the region grew 2.4 percent to $227,400.