Pending home sales increased 1.1% in March compared to February to reach the highest level since June 2013, according to the National Association of Realtors' (NAR) Pending Home Sales Index.
The increase comes after pending home sales rose 3.1%, month over month, in February compared to January.
Pending home sales reached an index score of 108.6, up from a revised index score of 107.4 in February. It was the third straight month that pending home sales increased on a month-over-month basis.
What's more, the March index score is 11.1% above the March 2014 index score of 97.7.
‘Demand appears to be stronger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year,’ says Lawrence Yun, chief economist for NAR, in a release. ‘While contract activity being up convincingly compared to a year ago is certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news. It indicates this year's activity is being driven by more long-term homeowners.’
Yun expects a gradual improvement in home sales in the months ahead but says insufficient supply and accelerating prices could be a drawback to sales reaching their full potential.
‘Demand in many markets is far exceeding supply, and properties in March sold at a faster rate than any month since last summer,’ he says. ‘This, in turn, has pushed home prices to unhealthy levels – nearly four or more times above the pace of wage growth in some parts of the country. Simply put, housing inventory for new and existing homes needs to improve measurably to improve affordability.’
Pending home sales increased 4.0%, month over month, in the South and increased 1.7% in the West. However, pending home sales were down 2.5% in the Midwest and down 1.5% in the Northeast.
For more, click here.