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Contract signings for home sales jumped in March, which could indicate a reversal of slowing many markets have experienced this spring. Pending home sales—a forward-looking indicator of home sales based on contract signings—climbed 6.1% in March compared to February, the National Association of REALTORS® reported Wednesday. The news on contract signings falls on the heels of the latest existing-home sales numbers, down nearly 6% in March compared to February and down 2.4% from a year earlier.
The rise in pending home sales could hint at a turnaround, says Lawrence Yun, NAR’s chief economist. “While contract signings are not a guarantee of eventual closings, the solid rise in pending home sales implies a sizable buildup of potential home buyers, fueled by ongoing job growth.” Yun also attributes the March bump to a slight dip in interest rates last month.
Mortgage rates dropped by around 20 to 30 basis points in March compared to the first two months of this year, NAR reports. In March, the average mortgage rate was 6.65%, down from nearly 7% earlier this year.
In many markets, the spring home buying season typically brings an influx of home buyers and sellers compared to the slower winter months. Judging by the latest pending home sales, the market should see a boost this year consistent with the pattern from previous years, Yun says. He notes that signed contracts surged 34% in March compared to February based on non-seasonally adjusted raw data.
Higher inventory levels may also be unleashing more buyers into the market. The inventory of homes for-sale rose by 8.1% in March compared to February and is up almost 20% compared to a year ago. This is “indicating a more dynamic housing market environment,” Yun says.
Regional Outlook for Home Sales
The rise in pending home sales in March was led by “substantial” increases in the South, up by about 10% from February, NAR reports. Contract signings also rose in the Midwest and West last month while declining in the Northeast, falling 3% from a year ago.
The South has been experiencing job growth, which has helped push up housing demand whereas the Northeast has seen a mostly stagnant job market and a lack of or-sale inventory, Yun said at a press conference last week on home sales.
Here’s an overview of how contract signings fared across the country last month:
- Northeast: Contract signings in March fell 0.5% from February and are down 3% from a year ago. Median price: $468,000, up 7.7% from one year earlier.
- Midwest: Pending home sales rose about 5% in March, up 1.4% from the previous year. Median price: $302,100, up 3.5% from March 2024.
- South: Contract signings increased about 10% in March, down 0.4% from a year ago. Median price: $360,400, up by 0.6% from a year ago.
- West: Signings increased about 5% compared to the prior month but were still down 2% from a year earlier. Median price: $621,200, up 2.6% from a year earlier.
