Washington (AFP) - Existing home sales in the United States crept lower in April as mortgage rates remained elevated, industry data showed Wednesday.

Sales of previously owned homes dipped by 1.9 percent from March, reaching a seasonally adjusted annual rate of 4.14 million, according to the National Association of Realtors (NAR).

Analysts had expected a slight uptick last month.

"Home sales changed little overall, but the upper-end market is experiencing a sizable gain due to more supply coming onto the market," NAR chief economist Lawrence Yun said in a statement.

Total housing inventory at the end of April was up nine percent from March, and was 16.3 percent higher from a year ago.

But the level of 1.2 million units remains markedly below the pre-pandemic period, Yun told a press briefing, adding that inventory remains "tight."

'Frustrating market'

Mortgage rates have surged in recent years as the Federal Reserve rapidly hiked the benchmark lending rate to tackle stubborn inflation.

For now, the central bank continues to hold rates steady as it seeks to stamp out price increases.

As of May 16, the popular 30-year fixed-rate mortgage averaged 7.02 percent, up from 6.39 percent a year prior, according to home loan finance firm Freddie Mac.

But in mid-May 2021, the rate was around three percent.

Higher rates have weighed on transactions, as homeowners who locked in lower rates previously remain reluctant to enter the market.

"It is a very frustrating market out there" for homebuyers, Yun told reporters. "Home prices are at record high, mortgage rates are high."

"It's a very strange situation where lack of inventory to some degree looks like it's hindering sales," he added.

For Navy Federal Credit Union corporate economist Robert Frick, "the only real relief to the situation will come from the Fed cutting rates later this year, which will eventually filter through to mortgage rates." 

From a year prior, home sales were also 1.9 percent lower in April, NAR data showed.

The median sales price last month rose 5.7 percent from a year ago to $407,600 -- the highest since June 2023.

Looking ahead, however, "the pace of price increases should taper off since more housing inventory is becoming available," Yun said.

Economist Oliver Allen at Pantheon Macroeconomics expects mortgage rates to fall in the coming quarters.

But he added: "If lower rates are accompanied by a sharp fall in hiring, reducing the pool of potential home buyers, the recovery in home sales will probably be anemic at best."