Pending home sales advanced 3.8% in March as lower mortgage rates brought more buyers into the market, according to the latest report from the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, grew to 105.8 in March, rising from February’s 101.9.
However, year-over-year contract signings declined 1.2%, marking the 15th consecutive month of annual decreases.
Additionally, activity in the four major regions varied as the PHSI in the Midwest, South and West rose and the Northeast declined.
These are the PHSI changes for each region:
- Northeast: Declined 1.7% to 90.5 but fell 0.4% from March 2018
- Midwest: Increased 2.3% to 95.3 but fell 5% from March 2018
- South: Increased 4.4% to 127.2 and is 0.7% higher than March 2018
- West: Increased 8.7% to 95.1 but fell 1.6% from March 2018
NAR’s Chief Economist Lawrence Yun said although home sales data has been exceptionally volatile over the past several months, he predicts numbers will begin to climb more consistently.
“We are seeing a positive sentiment from consumers about homebuying, as mortgage applications have been steadily increasing and mortgage rates are extremely favorable,” Yun said.
In fact, Yun noted that sales activity in the West increased at a relatively stable rate for five consecutive months before the region saw a significant spike in March.
And despite some affordability issues in the West, Yun said the numbers indicate that there is a reason for optimism.
Pending contracts appear to be on an overall upswing and current sales activity is underperforming, according to Yun.
“In the year 2000, we had 5 million home sales,” Yun said. “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.”
