By Nicole Friedman 

Sales of previously owned homes declined in March for the second straight month, as a shortage of homes for sale limited transactions.

Existing-home sales dropped 3.7% in March from February to a seasonally adjusted annual rate of 6.01 million, the National Association of Realtors said Thursday. March sales marked a 12.3% increase from a year earlier.

Economists surveyed by The Wall Street Journal expected a 1.8% monthly decline in sales of previously owned homes, which make up most of the housing market.

The housing market boomed in 2020, with home sales hitting the highest level in 14 years, due to low interest rates and new demand for housing spurred by the Covid-19 pandemic. But the pandemic also exacerbated a lack of inventory in the market. Buyers are competing fiercely for a limited number of homes, pushing prices sharply higher.

"The softening sales activity is not due to demand going away. Demand remains strong," said Lawrence Yun, NAR's chief economist. "It is the lack of inventory that is hindering the sales activity."

The median existing-home price rose 17.2% in March from a year earlier to $329,100, a record high, NAR said. The annual price appreciation was the strongest in data going back to 1999.

The typical home that sold in March spent 18 days on the market, the fastest pace on record and down from 20 days in February, NAR said.

Write to Nicole Friedman at nicole.friedman@wsj.com

(END) Dow Jones Newswires

April 22, 2021 10:27 ET (14:27 GMT)

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