The National Association of Realtors said on Monday existing home sales dropped 7.1 percent to an annual rate of 5.08 million units, the lowest level since November.

Sales have been volatile and prone to big swings up and down in recent months following the introduction in October of new mortgage regulations, which are intended to help homebuyers understand their loan options and shop around for loans best suited to their financial circumstances.

February's decline weighed on investor sentiment, with the S&P 500 stock index falling after the data was released.

Sales fell across the country, including a 17.1 percent plunge in the U.S. Northeast.

Economists had forecast home resales decreasing 2.8 percent to a pace of 5.32 million units last month. Sales were up 2.2 percent from a year ago.

The median price for a previously owned home increased 4.4 percent from a year ago to $210,800.

The housing report runs counter to data showing strong job growth and a stabilization of factory output, which had taken a hit from weaker demand overseas and a strong U.S. dollar.

Housing continues to be supported by a tightening labor market, which is starting to push up wage growth, boosting household formation. But a relative dearth of properties available for sale remains a challenge.

"Finding the right property at an affordable price is burdening many potential buyers," said NAR economist Lawrence Yun.

In February, the number of unsold homes on the market rose 3.3 percent from January to 1.88 million units, but was down 1.1 percent from a year ago.

At February's sales pace, it would take 4.4 months to clear the stock of houses on the market, up from 4.0 months in January. A six-month supply is viewed as a healthy balance between supply and demand.