Sales of previously occupied U.S. homes slowed in March to the slowest pace in nearly two years as a swift rise in mortgage rates and record-high prices discouraged would-be homebuyers.

Existing home sales fell 2.7% last month from February to a seasonally adjusted annual rate of 5.77 million, the National Association of Realtors said Wednesday.

That’s in line with what economists had been expecting, according to FactSet. It’s also the slowest pace since June 2020, when sales were running at an annualized rate of 4.77 million homes. Sales were down 4.5% from March 2021.

The slowdown came as mortgage rates surged, with the average rate on a 30-year fixed-rate home loan climbing to about 4.7% by the end of last month. Last week, the average hit 5% for the first time in more than a decade amid persistent high inflation. A year ago, the 30-year rate stood at 3.04%, according to Freddie Mac.

“At the moment my sense based on casually looking at data is that home sales could easily be down 10% this year versus last year,” said Lawrence Yun, NAR’s chief economist.

Yun also suggested annual median home price growth could slow by December to 5%.

Rising mortgage rates are complicating the homebuying equation during the spring homebuying season, traditionally the busiest period for home sales.

Rates are rising following a sharp move up in 10-year Treasury yields, reflecting expectations of higher interest rates overall as the Federal Reserve moves to hike short-term rates in order to combat surging inflation.

Higher rates can limit the pool of buyers and cool the rate of home price growth — good news for buyers. But higher rates also weaken their buying power.

For now, the housing market continues to favor sellers as buyers vie for fewer homes, which drives bidding wars, often pushing the sale price well above what the owner was asking.

The median home price in March jumped 15% from a year ago at this time to $375,300. That’s an all-time high on data going back to 1999, NAR said.

On average, homes sold in just 17 days of hitting the market last month. It was 18 days in February. In a market that’s more evenly balanced between buyers and sellers, homes typically remain on the market 45 days.

As is typical in the spring, the number of homes on the market increased in March from the previous month. Some 950,000 properties were available for sale by the end of March, up 11.8% from February, but down 9.5% from March 2021.

At the current sales pace, the level of for-sale properties amounts to a 2-month supply, the NAR said. That’s up from 1.7 months in February, and down from 2.1 months a year ago.

Real estate investors and other buyers able to buy a home without relying on financing fueled a sharp increase in all-cash transactions last month. They made up 28% of all sales, the highest share since July 2014, NAR said.

Homes purchased by investors made up 18% of sales, up from 15% in March 2021, while first-time buyers accounted for 30% of transactions, up from 29% in February and down from 32% in March last year.

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