Pending sales of previously owned US homes climbed for a second month in March as a pickup in inventory helped mitigate higher borrowing costs.
An index of contract signings increased by 1.5% to a four-month high of 73.7, according to National Association of Realtors data released Tuesday. The median forecast of economists surveyed by Bloomberg was for a 0.5% advance.
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"Contract signings rose in March despite higher mortgage rates, pointing to pent-up housing demand," NAR Chief Economist Lawrence Yun said in a statement. "A greater supply of inventory will help translate that demand into more home sales."
The average 30-year mortgage rate jumped to more than 6.5% by the end of the month, the highest since August, as rising energy costs caused by the Iran war sparked concerns about inflation. Home-buying conditions in University of Michigan data have worsened after hitting an almost two-year high in February.
Higher home-financing costs indicate housing demand may be hard-pressed to build much momentum entering the spring selling season, when listings historically rise. Prior to the war, the outlook for the real estate market was more favorable as mortgage rates headed down toward 6%.
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Pending home sales in the South, the biggest home-selling region in the country, increased 3.9% in March. They rose 4.4% in the Northeast but decreased in the Midwest and West.
Because houses typically go under contract a month or two before they're sold, the pending home sales data tend to be a leading indicator of closings that are captured in the monthly previously owned home sales reports. The NAR will release April existing-home sales figures on May 11.
