A sale sign stands outside a home for sale on July 17, 2014 in San Francisco, California.

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The US real estate market is suffering from the lowest supply in history, which is increasingly weighing on sales.

Home sales, a measure of the number of existing home contracts signed, fell 10.6% above expectations in February versus January, according to the National Association of Realtors. Sales fell by 0.5% compared to the previous year.

“The demand to buy a home is widespread, there are multiple offers, and time to market is fast,” said the broker’s chief economist, Lawrence Yun. “But contracts don’t click because of the low inventory.”

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There were only 1.03 million homes for sale at the end of February, a 29.5% decrease from February 2020. This is the biggest annual decrease of all time and the lowest offer in its history.

Sales now vary dramatically based on price as supply is so low on the low end and more plentiful on the high end.

Homes priced above $ 250,000 have seen the most active sales, but Yun notes that homes priced above $ 500,000 to less than $ 1 million have the same low inventory issues.

“Potential buyers may need to expand their geographic search areas in today’s tight market,” said Yun. “If there were more inventory to choose from – ideally five or six months of delivery – more buyers could buy properties at an affordable price.”

A recent hike in mortgage rates does not seem to be as much of an impact on homebuyer demand. The average interest rate on the popular 30-year fixed loan started the year under 3% and is now 3.45%, according to Mortgage News Daily. Historically, that’s still low.

However, real estate prices are rising rapidly. They are up more than 11% year over year, according to the latest S&P CoreLogic Case-Shiller property price index. The price increases are strongest at the lower end of the market, where supply is weakest and bidding wars are widespread.

In the region, outstanding home sales in the Northeast fell 9.2% month on month, down 3.9% year-on-year. In the Midwest, sales declined 9.5% for the month, down 6.1% from February 2020.

Sales in the south fell 13% a month and rose 2.9% annually. In the west, sales fell 7.4% from January and rose 1.9% from the previous year.