Pending home sales rose in March, reversing course from a month prior, according to the National Association of Realtors® (NAR). Three of the four major U.S. regions saw growth last month, with the Northeast reporting a minor slip in contract activity.
The Pending Home Sales Index (PHSI) – a forward-looking indicator based on contract signings – increased 3.8 percent to 105.8 in March, up from 101.9 in February. However, year-to-year contract signings declined 1.2 percent, making this the 15th straight month of annual decreases.
Pending home sales data has been exceptionally fluid over the past several months but NAR Chief Economist Lawrence Yun predicts that numbers will 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.”
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,” Yun says. “Inventory has increased, too. These are great conditions for the region.”
Citing data from realtor.com, Yun says the year-over-year increases indicate a potential rise in inventory. Denver, Seattle, San Francisco, Portland and Nashville metro areas saw the largest increase in active listings in March compared to a year ago.
Although pending contracts appear to be on an overall upswing, Yun says current sales activity is underperforming.
“In the year 2000, we had 5 million home sales,” Yun says. “Today, we are close to that same number, but there are 50 million more people in the country. There is a pent-up demand in the market, and we should see a better performing market in the coming quarters and years.”
The PHSI in the Northeast declined 1.7 percent to 90.5 in March and is now 0.4 percent below a year ago. In the Midwest, the index grew 2.3 percent to 95.3 in March – 5.0 percent lower than March 2018.
Pending home sales in the South jumped 4.4 percent to an index of 127.2 in March – 0.7 percent higher year-to-year. The index in the West ascended 8.7 percent to 95.1 and fell only 1.6 percent below a year ago.
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