Pending home sales climbed higher than expected last month, but supply issues are still weighing on contract activity.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 1.5 percent to 105.7 in March, compared to a downwardly revised 104.1 in February, according to the National Association of Realtors. Analysts were expecting an increase of about 1 percent.
The index is 7 percent above the same period last year. Pending sales have now been above year-ago levels for 23 consecutive months. An index reading of 100 equals the average level of contract signings during 2001.
Lawrence Yun, NAR chief economist, notes the low inventory situation in the housing market: “Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply. Little movement is expected in near-term sales closings, but they should edge up modestly as the year progresses. Job additions and rising household wealth will continue to support housing demand.”
Overall, the Pending Home Sales Index improved across much of the country. The index gained 0.3 percent in the Midwest, while increasing 1.5 percent in the West. Pending home sales jumped 2.7 percent in the South to reach 120. The Northeast region was unchanged at 82.8 in March.
The National Association of Realtors expects existing-home sales to increase 6.5 percent to 7 percent this year to approximately 5 million sales. The national median existing-home price is forecast to rise 7.5 percent.
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