March Pending Home Sales Maintain Momentum

Pending home sales increased slightly in March, reaching their highest level in nearly a year, the National Association of Realtors reported yesterday.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased by 1.4 percent to 110.5 in March from an downwardly revised 109.0 in February and is now 1.4 percent higher than a year ago (109.0). The index increased year-over-year for the 19th consecutive month and is at its highest reading since last May (111.0).

Three regions saw increases. In the Northeast, pending home sales increased by 3.2 percent to 97.0 and by 18.4 percent from a year ago. In the Midwest the index inched up by 0.2 percent to 112.8 and rose by 4.0 percent from a year ago. Pending sales in the South rose by 3.0 percent to 125.4 but fell by 0.6 percent from a year ago. West saw a 1.8 percent decline to 95.3, and was 7.9 percent below a year ago.

NAR Chief Economist Lawrence Yun said the increase signals a solid beginning to the spring buying season. “Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March,” he said. “This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing and are taking away some of the sting from home prices that are still rising too fast and above wage growth.”

Yun noted Demand is starting to weaken in some areas, particularly in the West, where the median home price rose by 38 percent in the past three years. “As a result, pending sales in the region have now declined in four of the last five months and are lower than one year ago for the third month in a row.”