Pending Home Sales Rise Again in March

March saw another increase in pending home sales, with contract activity rising unevenly in six of the past nine months, according to the NATIONAL ASSOCIATION OF REALTORS®.

The Pending Home Sales Index, which measures home-sale contract signings, rose 5.1% in March, but was down 11.4% compared to last March 2010, when home buyers were scrambling to meet the deadline for last year’s federal home buyer tax credit.

The data reflect contracts but not closings, which normally occur with a lag time of one or two months.

March’s home sales activity continues a trend of uneven—but notable—improvement in the housing market, said NAR Chief Economist Lawrence Yun. “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24% and demonstrate the market is recovering on its own,” he said. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”

Regional pending home sales

Regionally, pending home sales were mixed:

• The PHSI in the Northeast fell 3.2% in March and is 18.4% below March 2010.
   
• The index rose 3.0% in the Midwest but is 16.6% below a year ago.
• Southern pending home sales jumped 10.3% but are 10.5% below March 2010.
• In the West, the index increased 3.1% and is 4.1% below a year ago.

“Based on the current uptrend with very favorable affordability conditions, rising apartment rents, and ongoing job creation, existing-home sales should rise around 5 to 10% this year with sales growth of lower-priced homes likely to outperform high-end homes. That means the price trend will reflect more homes sold in the lower price ranges,” Yun said. “The good news is that recent home buyers are staying well within budget, leading to exceptionally low loan default rates among home buyers over the past two years,” Yun added.

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