House prices have risen in March but the pace of growth is slowing as the housing market continues to cool down, the Real Estate Institute says. 

Median prices for homes in New Zealand hit $890,000 last month, up 7.9 per cent on prices in March 2021, the REI latest report found. 

However, March sale prices were only 0.6 per cent higher than prices last month in February - a lower than expected result given March is typically a busy sales period, the REI said. 

Auckland homes, meanwhile, sold for a median $1.2 million during March, up 6.7 per cent on sale prices from a year earlier. 

REI chief executive Jen Baird said the data shows price growth is flattening, fewer homes are selling but more are listed for sale amid easing demand from buyers. 

"Over the past three months, we have seen a shift and the market is now settling into this phase of the cycle. 

"While we continue to see prices increase annually — in all but one region — the rate of growth is slowing, sales activity is down and the median days to sell is up. 

"We're seeing the market moderate." 

The slowdown follows on from nearly two years of skyrocketing price growth during the Covid pandemic when Auckland and New Zealand house prices regularly hit new record highs. 

However, high house prices together with rising interest rates and new rules that made it harder to be approved for a bank loan had reduced "the pool of buyers who are willing and able to pay market prices", Baird said. 

"The increase in interest rates over the past months presents one of the greatest impacts to the market. 

"Yesterday [Wednesday] the Reserve Bank increased the official cash rate by 50 basis points — to 1.5 per cent." 

She tipped the double rate hike to contribute to a further market slowdown as buyers reassess their ability to meet higher home loan repayments costs. 

The flatter market is also likely to cause more fluctuation in house prices from region to region, Baird said. 

"Last month, we saw strong prices in Otago, Southland and Canterbury, in March these regions are down — a reflection of what is happening across the country." 

House sales down 

One of the leading indicators of the market's slowdown is the drop off in the number of house sales, the REI said. 

Nationally, 6752 homes sold last month, a 34 per cent drop compared to the 10,151 homes sold in March 2021. 

Auckland sales also fell by 41 per cent from 4013 in March 2021 to 2367 last month. 

Homes taking longer to sell as more homes put on the market 

Homes across New Zealand typically took 36 days to sell in March 2022, or eight days longer than they did one year ago as buyer demand eases off. 

Auckland homes are taking 39 days to sell, which is also eight days longer than a year ago. 

It comes as the number of homes on sale has jumped dramatically. 

There were 25,659 homes on sale across the nation in March 2022, up 32 per cent on the 19,437 homes available in March last year.