by Improving index indicates that contract activity will continue to increase in the coming weeks and months
WASHINGTON, D.C. — March pending home sales fell .6% from March 2024 but rose 6.1% from February, marking what the National Association of Realtors described as the largest monthly increase since a 7% gain in December 2023.
According to the NAR, the Pending Home Sales Index rose 6.1% to 76.5 in March, while the year-over-year index fell less than a full point.
The index is a forward-looking indicator of home sales based on contract signings, with an index of 100 equal to the level of contract activity in 2001.
In March, the Midwest, West and South experienced monthly increases in contract signings, while the Northeast experienced a decline The gains were driven partly by mortgage rates, which the NAR said dropped by 20 to 30 basis points in March from January and February. It said the average mortgage rate was 6.65% in March, down from an average of 6.96% in January and 6.84% in February.
Year-over-year declines in contract signings occurred in the Northeast, South and West, while the Midwest experienced an increase.
“Home buyers are acutely sensitive to even minor fluctuations in mortgage rates,” said NAR Chief Economist Lawrence Yun. “While contract signings are not a guarantee of eventual closings, the solid rise in pending home sales implies a sizable build-up of potential home buyers, fueled by ongoing job growth.”
By region, the activity was as follows:
+ The Northeast PHSI (Pending Home Sales Index) dropped 0.5% from February to 62.5 and was down 3% from March 2024.
+ The Midwest PHSI rose 4.9% from February to 77.7 in March, and was up 1.4% from the previous year.
+ The South PHSI rose 9.8% from February to 94.1 in March and was down .4% from a year ago.
+ The West PHSI rose 4.8% from February to 58.6 in March and was down 2% from March 2024.
“Consumers should note that the spring homebuying season typically brings in a surge of home buyers and sellers compared to the winter months,” Yun added. “In March, signed contracts surged 34.1% from February based on non-seasonally adjusted raw data, reflecting a pattern consistent with previous years. In addition, inventory levels rose by 8.1% in March from the prior month, indicating a more dynamic housing-market environment.”
The NAR said that a pending sale is typically when the contract has been signed but the transaction has not closed. Sales are usually completed within a month or two of the contract signing. It also noted that while pending contracts are good early indicators of upcoming sales closings, the amount of time between pending contracts and completed sales is not identical for all home sales.
“Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues,” the NAR said.
As spring contract signings and closings continue over the next several weeks, however, this should also boost furniture sales as people look to spend on new furnishings for various rooms in the home.
