Sales of existing homes fell 0.6% in March to a seasonally adjusted annual rate of 4.92 million, according to a National Association of Realtors (NAR) report released today.

After rising 0.8% for February, analysts had predicted another 1% bump.

At the same time, squeezed inventory is pushing housing prices higher. The March median price for an existing home was $184,300, 11.8% above March 2012's price tag. The newest numbers mark the 13th straight month of year-over-year price increases, and March's YOY price jump is the largest since November 2005.

NAR Chief Economist Lawrence Yun reiterated his supply worries in a statement today:

Buyer traffic is 25 percent above a year ago when we were already seeing notable gains in shopping activity. In the same timeframe housing inventories have trended much lower, which is continuing to pressure home prices. The good news is home construction is rising and low mortgage rates are continuing to keep affordability conditions at historically favorable levels. The bad news is that underwriting standards remain excessively tight, while renters are getting squeezed by higher rents.

The median time on market for existing homes was 62 days in March, down from the previous month's 74 and a whopping 32% below last March's average of 91 days. Current inventories bumped up 1.6% to 1.93 million existing homes, equivalent to a 4.7-month supply at current sales rates.

According to Yun, the inventory gains are largely seasonal and the market still "broadly favors sellers." Looking ahead, Yun estimates that housing inventories will need to expand to a six-month supply for buyers and sellers to create a more stable market.

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