By Vicki Needham - 04/23/14 03:47 PM EDT
Sales of new home plummeted 14.5 percent in March as a lack of credit availabilty held back potential home purchases.
The pace of sales fell to a seasonally adjusted annual rate of 384,000 units from a revised rate of 449,00 in February, the lowest level since July 2013, the Department of Housing and Urban Development and the Census Bureau said Wednesday.
"Congress must outline a clear policy on housing finance so that qualified buyers can get home loans. Otherwise, this continued uncertainty could threaten the housing recovery and overall economy."
Still, mortgage giant Freddie Mac cautioned that the sales data should be kept in perspective and that monthly sales are running only slightly behind last year they are well above levels in 2009-2012.
Meanwhile, sales dropped sharply in three out of four regions — 21.5 percent in the Midwest, 14.4 percent in the South and 16.7 percent in the West.
But sales picked up in the Northeast, increasing 12.5 percent.
Housing industry experts are expecting the sector to pick up pace after a long, cold winter pushed the economic recovery a bit off track.
"Overly stringent underwriting standards for mortgages have had a detrimental effect on modest-priced markets and have hit first-time home buyers particularly hard," said David Crowe, NAHB's chief economist.
"As a result, most of the sales are coming from a smaller pool of buyers who have a more established credit history, are more likely to finance with higher cash downpayments and are purchasing higher-priced homes."
The inventory of new homes for sale edged up to 193,000 units in March, which is a six-month supply at the current sales pace.
The new-home sales data comes a day after the National Association of Realtors said that existing homes edged down 0.2 percent to a seasonally adjusted annual rate of 4.59 million, the seventh drop in the past eight months.
A combination of inventory shortages and rising prices kept buyers from making purchases.