Pending home sales increased less than forecast in March
A gauge of signed contracts to purchase previously-owned homes rose less than forecast in March while the prior month's reading was revised down, indicating a lack of inventory is restraining the market
The pending home sales index rose 0.4% from February; the estimate was for a 0.7%, according to the National Association of Realtors. This followed a revised 2.8% increase in February from January, revised downward from the original 3.1%. The index declined 4.4% year-over-year on an unadjusted basis after a revised 4.7% decrease in March 2017.
The latest results show that interested buyers continue to face a persistent shortage of affordable inventory that is driving up property prices faster than wage growth. Nonetheless, a solid job market and lower taxes are helping underpin demand for housing even as mortgage rates climb to an almost five-year high.
The NAR revised its annual sales forecast to 5.61 million existing homes this year, 1.8% more than in 2017. It previously projected sales would match last year’s 5.51 million.
Existing-home sales climbed to a four-month high in March, the NAR previously reported, with half of the houses sold being on the market for less than a month. The NAR expects the market will remain tight until more institutional investors list their properties and more homeowners agree to sell their houses.
"Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory," Lawrence Yun, the NAR's chief economist, said in a statement. "Prospective buyers are increasingly having difficulty finding an affordable home to buy.
"It is an absolute necessity for there to be a large increase in new and existing homes available for sale in coming months to moderate home price growth. Otherwise, sales will remain stuck in this holding pattern and a growing share of would-be buyers – especially first-time buyers – will be left on the sidelines."
Purchases dropped 5.6% in the Northeast, reflecting multiple winter storms. Sales declined 1.1% in the West. However, they climbed 2.5% in the South and 2.4% in the Midwest.