Yup, Pretty Much What We Expected: Pending Home Sales Up 11% in March
There were more houses under contract in March than in any other month since June 2013, according to the National Association of Realtors®.
The Pending Home Sales Index shows an 11% increase in home buyer activity from March 2014 to March 2015. The index tracks contracts signed that are waiting to close, so it’s a good indicator of future existing-home sales numbers. A property is marked as “pending” only after all contingencies have been met.
For March, pending sales inched up only about 1% from February. However, this is the third straight monthly increase, which leads experts to believe the housing market could be in for a banner year—if only there is enough inventory to satisfy demand.
“Demand in many markets is far exceeding supply, and properties in March sold at a faster rate than any month since last summer,” said Lawrence Yun, chief economist at NAR. “This in turn has pushed home prices to unhealthy levels—nearly four or more times above the pace of wage growth in some parts of the country. Simply put, housing inventory for new and existing homes needs to improve measurably to improve affordability.”
Of course, some parts of the country performed better than others. Pending sales dropped in the Northeast for the fourth straight month. In the Midwest, the index declined by nearly 3%, but market activity is still more than 11% above where it was in March 2014.
No surprise, the strongest markets are posting the highest pending home sales activity. In the South, pending sales increased 4%, bringing the index to 126.5, which is more than 12% above March 2014. In the West, pending sales rose just under 2%, bringing the index to 103.7 and giving March 2015 a nearly 16% increase over March 2014, according to the report.
The good news: Housing demand seems to be driven by job growth and traditional home buyers rather than investors. According to the March Realtors Confidence Index, about 15% of first-quarter 2015 home sales were made to investors, down from 19% in the first quarter of 2014.
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