Home sales slipped in March as would-be buyers continue to grapple with tough credit standards and too few houses on the market.
Chattanooga Realtors sold 4.8 percent fewer home last month than they did a year ago as inventory levels also shrank by 2.4 percent.
The decline in Chattanooga sales was bigger than the 0.2 percent nationwide drop reported Tuesday by the National Association of Realtors. NAR said home sales were at a seasonally adjusted 4.59 million annual rate in the first quarter. March was the seventh drop in the past eight months.
The Greater Chattanooga Association of Realtors reported Tuesday that that 579 residential homes were sold in March.
Despite the sales decline, however, median home prices in Chattanooga grew 3.8 percent over year-ago levels to $135,000.
Nationwide, the median sales price last month was $198,200, up 7.4 percent from 12 months ago.
"Although interest rates are up slightly from their all-time lows, borrowing costs are remarkably affordable," said Vicki Trap, president of the Greater Chattanooga Association of Realtors. "Consumer spending has risen and claims for unemployment benefits have dropped. Positive economic health will fuel housing growth for the remainder of 2014."
Trapp said winter sales of homes were hurt by the weather and people preparing their taxes, "but we're seeing more homes come on the market and more buyers getting in the market every day." On Tuesday, more than 60 homes were added to the Chattanooga Multiple Listing Service, Trapp said.
NAR chief economist Lawrence Yun said he expected the fundamentals of the market suggested that the sales slowdown would turn around soon.
"There really should be stronger levels of home sales, given our population growth," he said. "With ongoing job creation and some weather-delayed shopping activity, home sales should pick up, especially if inventory continues to improve and mortgage interest rates rise only modestly."
Nationwide, the number of homes on the market rose nearly 5 percent, to roughly 5.2 months' worth of unsold homes available. That's up from February, but still below the six-month supply normally considered healthy.
NAR President Steve Brown noted that supply is tighter at lower price points, which along with tight underwriting standards is making it hard for first-time buyers to get into the market. But, he said, growth in new-home construction and sales could make more entry-level homes available as people trade up.
"Hopefully this will create more opportunities for first-time buyers," he said.