March Pending Home Sales Up 4%

Pending home sales rose in March, reversing course from February, the National Association of Realtors said yesterday.

The Pending Home Sales Index increased by 3.8% to 105.8 in March, up from 101.9 in February. Year-over-year contract signings declined by 1.2%, marking the 15th straight month of annual decreases.

Three of the four major regions saw growth last month, with only the Northeast reporting a 1.7% slip in contract activity to 90.5; from a year ago, the index fell by 0.4%. Pending home sales in the South jumped by 4.4% to 127.2 in March and by 0.7% from a year ago. In the West, the index rose by 8.7% in March to 95.1 but fell by 1.6% from a year ago. In the Midwest, the index rose by 2.3% to 95.3 in March, but fell by 5.0% from a year ago.

“The increase in pending home sales in March aligns with the rise in purchase applications we reported for the month,” said Mortgage Bankers Association Chief Economist Mike Fratantoni. “The strengthening job market, combined with lower mortgage rates and increased housing supply in many markets, helped more prospective buyers find a home last month. In short, conditions are ripe for further sales increases in the coming months.”

Furthermore, Fratantoni added, the rebound in pending sales in the West is a “positive sign, as the region had stalled significantly towards the end of last year due to higher mortgage rates’ impact on overall affordability.”

NAR Chief Economist Lawrence Yun noted pending home sales data have been “exceptionally fluid” over the past several months, but said numbers should begin to climb more consistently.

“We are seeing a positive sentiment from consumers about home buying, as mortgage applications have been steadily increasing and mortgage rates are extremely favorable,” Yun said.

Yun noted sales activity in the West had increased at a relatively stable rate for five consecutive months before the region saw a significant spike in activity in March. “Despite some affordability issues in the West, the numbers indicate that there is a reason for optimism,” he said. “Inventory has increased, too. These are great conditions for the region.”