Sales of US homes cool along with the weather

Sales of previously owned US homes dropped last month to the lowest level in more than a year as harsh winter weather combined with a lack of supply, strict lending rules and declining affordability to depress demand.

Purchases decreased 5.1 per cent to a 4.62 million annual rate last month, the fewest since July 2012, figures from the National Association of Realtors (NAR) showed last week. Sales fell in all four regions of the country, indicating unusually frigid temperatures were only partly to blame.

"The weather played some role, but just as much of a role was played by lower inventories, higher mortgage rates, slightly higher prices and tighter credit," said Robert Rosener, an economist at Credit Agricole CIB in New York, who correctly projected the drop in sales. "We're on a positive trajectory, and when the spring comes we should see a bounce back."

The degree of rebound this year will hinge on continued gains in hiring and residential construction that will help overcome the hurdles of too few properties and rising prices. These issues are particularly acute for first-time buyers, who last month made up the smallest share of the market since record-keeping began more than five years ago.

The median forecast of 79 economists surveyed by Bloomberg projected sales would drop to a 4.67 million rate. Estimates ranged from a 4.5 million pace to 4.9 million. December's figure was unrevised at a 4.87 million pace.