Analysts say the market could slump further after the collapse of the market two years ago that has weakened the economy and cost banks billions of dollars.
Builders cut 1.1 per cent off the actual number of unsold homes to 468,000. But with the slowing sales rate they were left with an 11-month supply, the lowest level since an 11.3-month supply in September 1981.
US to enter recession later this year, with only mild recovery in 2009, IMF says
In April, US jobless percentage reached new high of 5.1 per cent
US Federal Reserve has cut rates seven times since last September in bid to halt financial slowdown
IMF says global losses from mortgage subprime crisis could top $945bn
Biggest losses include $18bn for Citigroup and $14.1bn for Merrill Lynch in last quarter of 2007
George Bush, US president, signed $167bn stimulus package to combat financial crisis in February
Sources: IMF, company reports, US Department of Labour
“Excess supply remains significant, suggesting that the downward adjustment will continue in the months ahead,” said Marie-Pierre Ripert, analyst at Natixis.
Ripert added that median prices are “likely to remain on their downward trend”.
Low home sales in March affected all regions of the country with the northeast US hardest hit as local sales plummeted by 19.4 per cent to their lowest level since 1981.
Sales in the northeast have fallen a record 64.6 per cent over the past 12 months in total.
The US Federal Reserve has already slashed three percentage points off its key interest rate to 2.25 per cent since September in a bid to restore momentum to Gross Domestic Growth (GDP) growth amid the housing downturn, the ongoing subprime mortgage crisis and a related credit squeeze.
The bank is widely expected to lower its federal funds rate again further by a quarter point at its April 29-30 meeting.
US markets have faced periodic bouts of chaos in the fallout from the sub-prime mortgage crisis, which has cost banks tens of billions of dollars, and left the economy on the brink of a recession.
US banks were hit hard after offering high interest mortgages to borrowers who were later unable to repay.
The crisis has also affected international lenders, who bought into or offered sub-prime loans in the US and then contributed to bouts of chaos on international financial markets.
Banks in the US have foreclosed on home loans to thousands of people during the crisis.