Following two consecutive months of declines, pending home sales rebounded in March.
The National Association of Realtors (NAR) reported that the Pending Home Sales Index (PHSI) increased 1.9% to 111.3 in March. An index of 100 is equal to the level of contract activity in 2001.
Also, year-over-year contract signing jumped 23.3% due largely to the reduction in pandemic lockdowns implemented in March 2020.
“The increase in pending sales transactions for the month of March is indicative of high housing demand,” said Lawrence Yun, NAR chief economist. “With mortgage rates still very close to record lows and a solid job recovery underway, demand will likely remain high.”
While low inventory has been a consistent problem, Yun said he expects more inventory to show up as new home construction ramps up in the coming months.
“Although these moves won’t immediately replenish low supply, they will be a step forward,” Yun said.
Existing-home sales are projected to rise by 10% in 2021 to reach 6.2 million in 2021, while the median home price is anticipated to increase by 9% in 2021 to $323,900.
The NAR said 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.
In the meantime, mortgage rates are expected to modestly climb higher over the next two years, to 3.2% in 2021 and 3.5% in 2022, as inflation rises due to a stronger economy and higher fiscal spending. The economy is anticipated to expand 4.5% in 2021 and 3.5% in 2022.
Realtor.com’s “Hottest Housing Markets” report data shows that our of the 40 largest metro markets, the most improved as of April 14 are Jacksonville, Fla.; Tampa-St. Petersburg-Clearwater, Fla.; Austin-Round Rock, Texas; Riverside-San Bernardino-Ontario, Calif.; and San Antonio-New Braunfels, Texas.
Here’s how pending home sales break down by region:
- The Northeast PHSI rose 6.1% to 97.9 in March, a 16.7% increase from a year ago.
- In the Midwest, the index fell 3.7% to 98.6 last month, up 14.1% from March 2020.
- Pending home sales transactions in the South jumped 2.9% to an index of 137.2 in March, up 27.9% from March 2020.
- The index in the West grew 2.9% in March to 94.5, up 29.8% from a year prior.
The National Association of Realtors represents more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.