Pending home sales increased 3.4% in March compared with February and were up 0.1% compared with March 2023, according to the National Association of Realtors (NAR).
Regionally, the Northeast, South and West posted monthly gains in transactions, while the Midwest recorded a loss.
Lawrence Yun, chief economist for NAR, says pending home sales in March marked “the best performance in a year, but it still remains in a fairly narrow range over the last 12 months without a measurable breakout.”
“Meaningful gains will only occur with declining mortgage rates and rising inventory,” Yun says.
NAR forecasts that existing-home sales will rise by 9% in 2024 to 4.46 million (from 4.09 million 2023) and another 13.2% in 2025.
Housing starts are expected to rise by 1.2% in 2024 to 1.43 million (from 1.413 million in 2023) and 4.9% to 1.5 million in 2025.
“Home sales have lingered at 30-year lows, and since 70 million more Americans live in the country now compared to three decades ago, it’s inevitable that sales will rise in coming years,” Yun says. “Inventory will grow steadily from more home construction, and various life-changing events will require people to trade up, trade down or move to another location.”
NAR expects that median home prices will increase by 1.8% in 2024 to a record of $396,800 (from $389,800 in 2023) and another 1.8% in 2025 to $403,800.
NAR forecasts a modest reduction – 0.6% – in the median new home price to $426,100 in 2024 (from $428,600 in 2023), reflecting the building of smaller-sized homes.
The association anticipates the median new home price will jump 3.4% to $440,500 in 2025.
“Home prices are expected to rise roughly in line with consumer price inflation and wage growth over the next two years,” Yun says. “Most homeowners are on strong financial footing in current market conditions, with only 2 percent of sales classified as being distressed.”
NAR expects home sales to steadily improve while home prices continue to hit record highs.
“Job gains, steady mortgage rates and the release of inventory from pent-up home sellers will lead to more sales,” Yun explains. “Given the lingering housing shortage, home prices will march higher, albeit much more slowly than in the past.
“Inventory will gradually rise from recent growth in home building,” he adds. “Additionally, many sellers who delayed listing in the past two years will start putting their homes on the market to move to a different home that better fits their new life circumstances – such as changes in family composition, jobs, commuting patterns and retirees wanting to be closer to their grandkids.”
Photo: Julien Maculan