Did the Housing Market Finally Receive Some Good News?
The housing market finally received some good news. After reaching its worst level in over two years, pending home sales in the United States posted the first gain in nine months.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 3.4 percent to 97.4 in March from an upwardly revised 94.2 in February, according to the latest report from the National Association of Realtors. On average, economists expected sales to only gain about 1 percent. However, sales are still 7.9 percent below the March 2013 level of 105.7. In February, pending home sales declined to their lowest reading since October 2011.
With better weather conditions and increased housing inventory, more activity is expected in the coming months. “After a dismal winter, more buyers got an opportunity to look at homes last month and are beginning to make contract offers,” said Lawrence Yun, NAR chief economist, in a press release. “Sales activity is expected to steadily pick up as more inventory reaches the market, and from ongoing job creation in the economy.”
Affordability issues are still a headwind for many homebuyers, and all four major regions in the country were below year-ago levels. The Pending Home Sales Index for the South is 5.3 percent below the same level from a year earlier, while the Northeast is 5.9 percent lower. Sales in the Midwest dropped nearly 1 percent last month and are 10.1 percent below March 2013. The index in the West jumped 5.7 percent in March, but is 11.1 percent below a year earlier.
The National Association of Realtors expects total existing-home sales this year to total around 4.9 million units, which is slightly below the nearly 5.1 million recorded last year. Housing starts are projected to rise almost 19 percent in 2014, and reach about 1.1 million, closer to the underlying demand of 1.5 million. Meanwhile, the national median existing-home price is expected to rise at a more reasonable range of 6 to 7 percent in 2014 and grow another 4 percent in 2015.
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