Pending home sales inched up 0.4% in March compared with February to reach a score of 107.6 on the National Association of Realtors’ (NAR) Pending Home Sales index.
That’s up from a downwardly revised score of 107.2 in February.
It was the second consecutive month that pending home sales eked out an increase.
However, on a year-over-year basis, contract signings were down 3.0%.
Lack of inventory continues to be the main factor hampering pending home sales.
“Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory,” says Lawrence Yun, chief economist for NAR, in a statement. “Steady price growth and the swift pace listings are coming off the market are proof that more supply is needed to fully satisfy demand. What continues to hold back sales is the fact that prospective buyers are increasingly having difficulty finding an affordable home to buy.”
“Yun adds that the multiple winter storms and unseasonably cold weather in the Northeast contributed to the decrease in contract signings in March.
An ongoing problem is that the low inventory is driving up home prices, which, in turn, is reducing affordability. Price appreciation in most markets continues to outpace incomes.
In addition, mortgage rates are on the rise, further exacerbating the affordability challenge.
“Much of the country is enjoying a thriving job market, but buying a home is becoming more expensive,” Yun says. “That is why it is an absolute necessity for there to be a large increase in new and existing homes available for sale in coming months to moderate home price growth. Otherwise, sales will remain stuck in this holding pattern and a growing share of would-be buyers – especially first-time buyers – will be left on the sidelines.”
Yun forecasts that existing-home sales in 2018 will reach 5.61 million, up from 5.51 million in 2017.
The national median existing-home price is expected to increase around 4.4%.
In 2017, existing sales increased 1.1% and prices rose 5.8%.
Regionally, pending home sales fell 5.6% in the Northeast and decreased 1.1% in the West in March compared with February. However, pending home sales were up 2.5% in the South and 2.4% in the Midwest.
