Sales of previously owned homes fell in March after jumping a month earlier by the most in more than five years.

Purchases declined 3% from February to an annual rate of 4.57 million, lower than forecast, the National Association of Realtors said Thursday. The median home price slumped 12% from a year earlier, and distressed properties accounted for about 50% of all sales.

Record-low mortgage rates and a foreclosure-driven plunge in prices are making houses more affordable, helping the market stabilize after the biggest slump since the Great Depression. Even so, mounting job losses dim prospects for an immediate recovery.

"This fits with an idea of stabilization of housing demand," said Jonathan Basile, an economist at Credit Suisse Group in New York. "We've seen housing affordability go up across the country. The bad news has been diminishing."

Economists had forecast resales would fall to a 4.65 million annual rate, according to the median of 69 estimates in a Bloomberg News survey.

Estimates ranged from rates of 4.37 million to 4.9 million. Last month's sales pace was still higher than the decade-low 4.49 million reached in January.

Purchases were down 7.1% compared with a year earlier.

The number of houses on the market dropped 1.6%, to 3.74 million. At the current sales pace, it would take 9.8 months to sell that many homes, up from the 9.7-month supply in February. The agents' group has said a five- to six-months' supply is consistent with a stable market.

The median price of an existing home fell to $175,200 in March, from $200,100 a year earlier.

Resales of single-family homes declined 2.8%, to an annual rate of 4.1 million. Sales of condominiums and cooperative units dropped 4.1%, to a 470,000 rate.

The decline in total sales last month was led by an 8% slump in the Northeast. Purchases also fell in the West and South but were unchanged in the Midwest.

The surge in foreclosures is causing prices to drop, making homes more affordable, particularly for first-time buyers, the real estate agents' group said. Distressed properties accounted for about 50% of all home resales in February, the group said, up from about 45% in previous months. First-time buyers accounted for about 51% of sales last month, the Realtors said.

Government efforts to reduce borrowing costs and unclog lending may be starting to pay off. The Realtors' affordability index, which tracks mortgage rates, home prices and incomes, surged in February to the highest level in 20 years of data.

The gain for distressed properties may be hurting sales of new homes.

Last month Lennar Corp. reported a wider loss for its fiscal first quarter, which ended Feb. 28, than a year earlier and said orders fell 28%.

The home builder also said orders tumbled in January and February.

Among other things, "growing foreclosure rates negatively impacted new-home sales in most of our markets," Lennar's chief executive officer, Stuart Miller, said.

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