The market saw a slight bump in pending sales last month, even as many buyers waited for more inventory to hit the market this spring.
Pending home sales—a forward-looking indicator based on contract signings—rose 1.5% in March compared to February, the National Association of REALTORS® reported Tuesday. That follows a 2.5% increase in pending home sales in February, though NAR’s other economic indicator, existing-home sales, saw a dip in March—as mortgage interest rates edged up amid concerns about war and inflation.
Contract signings remain down 1.1% compared to a year ago. Still, the fact that pending home sales rose from February despite higher mortgage rates points to pent-up housing demand, says Lawrence Yun, NAR’s chief economist. “A greater supply of inventory will help translate that demand into more home sales.”
Buyers Waiting for More Homes?
NAR reported in its existing-home sales report last week that inventories were up only 2.3% annually in March, falling from the double-digit inventory gains seen earlier in the year.
“The inventory-to-sales ratio, or supply-to-demand ratio, is below historical norms,” Yun recently noted, adding that bringing 300,000 to 500,000 more homes on to the market would help bring the market closer to normal conditions.
The tighter housing inventories in many markets are continuing to press on home prices. The median home price rose to a record high for the month of March—reaching $408,800, NAR recently reported.
Higher mortgage rates lately are complicating the affordability equation for buyers this spring. The average 30-year fixed-rate mortgage was at a three-year low of 5.98% at the end of February before moving back up. The average was 6.30% last week, according to Freddie Mac.
“Demand sensitivity to mortgage rates is greatest among first-time buyers, particularly younger buyers,” Yun says. “As a result, boosting supply and new-home construction should focus on smaller, more affordable homes.”
10 Markets With the Biggest Gains in Pending Home Sales
A handful of markets are posting notable gains this March. Realtor.com® Economics data shows the following 10 markets posted the largest annual increases in pending home sales in March:
- Kansas City, Mo.–Kansas City, Kan.: +14.9%
- Milwaukee–Waukesha, Wis.: +13.5%
- Austin–Round Rock–San Marcos, Texas: +12.8%
- Phoenix–Mesa–Chandler, Ariz.: +12.1%
- Raleigh–Cary, N.C.: +10%
- Portland–Vancouver–Hillsboro, Ore.–Wash.: +9.7%
- Richmond, Va.: +8.5%
- Virginia Beach–Chesapeake–Norfolk, Va.–N.C.: +8.5%
- Dallas–Fort Worth–Arlington, Texas: +8.1%
- Washington, D.C.–Arlington–Alexandria, Va.–Maryland: +8%
Regional Outlook
Here’s a closer look at how pending home sales fared across the country in March, according to NAR’s Pending Home Sales Report.
- Northeast: 4.4% increase in March compared to February; 6.5% drop annually.
- Midwest: 1.3% decrease in March compared to February; 3.1% drop annually.
- South: 3.9% increase in March compared to February; 2.3% increase annually.
- West: 2.6% decrease in March compared to February; 1.7% drop annually.
