Kevin Sears President | Official website
Pending home sales rose by 6.1% in March, marking the most significant month-to-month change since December 2023, according to the National Association of REALTORS. The increase comes even as the Northeast witnessed a decline in transactions, contrasting with increases in the Midwest, South, and West regions, with the South experiencing the largest gains.
Year-over-year, contract signings grew in the Midwest but saw declines in other regions, most notably in the Northeast. The Pending Home Sales Index (PHSI), which is an indicator of future home sales based on contract signings, increased by 6.1% to a level of 76.5 in March. When compared year-over-year, pending transactions fell by 0.6%.
Lawrence Yun, NAR Chief Economist, stated, "Home buyers are acutely sensitive to even minor fluctuations in mortgage rates. While contract signings are not a guarantee of eventual closings, the solid rise in pending home sales implies a sizable build-up of potential home buyers, fueled by ongoing job growth."
Mortgage rates dropped by about 20 to 30 basis points in March, with the average rate being 6.65%, compared to 6.96% in January and 6.84% in February.
Breaking it down by region, the Northeast's PHSI decreased by 0.5% to 62.5 from the previous month, showing a yearly decline of 3.0%. The Midwest rose by 4.9% to 77.7, marking an annual increase of 1.4%. The South surged by 9.8% to 94.1, with a slight yearly decline of 0.4%, and the West's index climbed by 4.8% to 58.6, showing a decrease of 2.0% from March 2024.
Yun added, "Consumers should note that the spring homebuying season typically brings in a surge of home buyers and sellers compared to the winter months. In March, signed contracts surged 34.1% from February based on non-seasonally adjusted raw data, reflecting a pattern consistent with previous years. In addition, inventory levels rose by 8.1% in March from the prior month, indicating a more dynamic housing-market environment."
The National Association of REALTORS is involved in all areas of real estate, and members are identified by the term REALTOR, denoting adherence to a strict Code of Ethics.
The Pending Home Sales Index is a forward-looking measure for the housing sector based on pending sales of existing homes. A sale is recorded as pending when a contract has been signed but the transaction hasn't closed. This index is derived from a sample covering approximately 40% of multiple listing service data each month and serves as a precursor to future sales closings.
Existing-Home Sales for April will be announced on May 22, and the next Pending Home Sales Index will be available on May 29.
