U.S. new-home sales fell again in March as low inventory, rising interest rates and elevated home prices curbed the pace of transactions.

The rate of new single-family home sales fell 8.6% from January’s revised number to a seasonally adjusted, annual rate of 763,000, while the median sales price jumped to $436,700 from February’s revised median house price of $421,600, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported.

On a year-over-year basis, the pace of new-home sales in March was down 12.6%.

The seasonally adjusted estimate of new homes for sale at the end of March was 407,000, representing a supply of 6.4 months at the current sales rate, according to a press release.

While rising mortgage rates and home prices have crimped homebuyer purchasing power, the housing market still stands to benefit from other factors at work, RCLCO Real Estate Consulting principal Kelly Mangold said.

“Demographics remain a strong driver of housing demand, and as the market adjusts to deliver product at price points and formats that align with this demand, sales are likely to be bolstered,” she said. “In particular, due to the shortage of construction labor, buyers may be more hesitant to purchase a fixer-upper, understanding that the cost and timeline of renovations may be extended, making a turn-key new construction home more appealing.”

By region, the number of new-construction homes sold was down across the board, led by the South with a 10.2% monthly drop and followed by the Midwest with an 8.7% drop, the West with a 6% decline and the Northeast with a 5.4% decrease.

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