Pending home sales rose in March, reversing course from a month prior but remaining below year-earlier levels, the National Association of Realtors reported Tuesday. Three of the four major regions saw growth last month, as the Northeast reported a minor slip in contract activity.
The Pending Home Sales Index increased 3.8% to 105.8 in March, up from 101.9 in February. Year-over-year contract signings declined 1.2%, making this the 15th straight month of annual decreases.
The PHSI in the Northeast declined 1.7% to 90.5 in March and is now 0.4% below a year ago. In the Midwest, the index grew 2.3% to 95.3 in March, 5.0% lower than March 2018. Pending home sales in the South jumped up 4.4% to an index of 127.2 in March, which is 0.7% higher than last March. The index in the West ascended 8.7% in March to 95.1 and fell only 1.6% below a year ago.
Lawrence Yun, NAR chief economist, noted that pending home sales data has been exceptionally fluid over the past several months but predicted 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.”
Yun noted that 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. Inventory has increased, too. These are great conditions for the region.”
Mike Fratantoni, SVP and chief economist for the Mortgage Bankers Association, said, “The increase in Pending Home Sales in March aligns with the rise in purchase applications we reported for the month. 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.
He continued, "Furthermore, 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.”
Pointing to active listings from data at realtor.com, Yun said the year-over-year increases indicate a potential rise in inventory. Denver-Aurora-Lakewood, Colo., Seattle-Tacoma-Bellevue, Wash., San Francisco-Oakland-Hayward, Calif., Portland-Vancouver-Hillsboro, Ore.-Wash., and Nashville-Davidson-Murfreesboro-Franklin, Tenn., 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 said current sales activity is underperforming. “In the year 2000, we had 5 million home sales. Today, we are close to that same number, but there are 50 million more people in the country,” he said. “There is a pent-up demand in the market, and we should see a better performing market in the coming quarters and years.”