Pending home sales increased in March, snapping two consecutive months of declines, according to the National Association of Realtors. All but one of the four major U.S. regions experienced month-over-month gains in March, while each area recorded year-over-year growth.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, rose 1.9 percent to 111.3 in March. Year-over-year, contract signings jumped 23.3 percent, with the difference due in large part to the pandemic-induced lockdown in March 2020. An index of 100 is equal to the level of contract activity in 2001.
“The increase in pending sales transactions for the month of March is indicative of high housing demand,” said Lawrence Yun, NAR’s chief economist. “With mortgage rates still very close to record lows and a solid job recovery underway, demand will likely remain high.”
“Low inventory has been a consistent problem, but more inventory will show up as new home construction intensifies in the coming months, as well as from a steady wind-down of the mortgage forbearance program,” Yun continued. “Although these moves won’t immediately replenish low supply, they will be a step forward.”
Existing-home sales are projected to rise by 10 percent in 2021 to reach 6.2 million in 2021, while the median home price is anticipated to increase by 9 percent in 2021 to $323,900.
Housing starts are forecasted to reach 1.6 million in 2021 and 1.7 million in 2022, providing much-needed relief to the housing inventory deficit. Mortgage rates are expected to modestly climb higher over the next two years, to 3.2 percent in 2021 and 3.5 percent in 2022, as inflation rises due to a stronger economy and higher fiscal spending. The economy is anticipated to expand 4.5 percent in 2021 and 3.5 percent in 2022.
Realtor.com’s Hottest Housing Markets data revealed that out of the largest 40 metros, the most improved metros over the past year, as of April 14, were Jacksonville, Florida; Tampa-St. Petersburg-Clearwater, Florida; Austin-Round Rock, Texas; Riverside-San Bernardino-Ontario, California; and San Antonio-New Braunfels, Texas.
The Northeast PHSI rose 6.1 percent to 97.9 in March, a 16.7 percent increase from a year ago. In the Midwest, the index fell 3.7 percent to 98.6 last month, up 14.1 percent from March 2020.
Pending home sales transactions in the South jumped 2.9 percent to an index of 137.2 in March, up 27.9 percent from March 2020. The index in the West grew 2.9 percent in March to 94.5, up 29.8 percent from a year prior.