Pending Sales Improved In March But Show No Signs Of "Breakout"

Pending home sales improved in March but low inventory remains a challenge to affordability.

NAR’s Pending Home Sales Index rose by 3.4% month-over-month to a reading of 78.2 last month. An index of 100 is equal to the level of contract activity in 2001.

Year-over-year, they were up a modest 0.1%, with the Midwest and West seeing improvement.

“March’s Pending Home Sales Index – at 78.2 – marks the best performance in a year, but it still remains in a fairly narrow range over the last 12 months without a measurable breakout,” said NAR Chief Economist Lawrence Yun. “Meaningful gains will only occur with declining mortgage rates and rising inventory.”

Month-over-month sales rose in all regions but the Midwest, which registered declines.

Yun called sales growth “inevitable” due to the growing number of potential buyers of the U.S. In the last three decades, the country has added 70 million more people.

“Inventory will grow steadily from more home construction, and various life-changing events will require people to trade up, trade down or move to another location,” Yun said.

Homebuyers are facing the highest rates of the year, with the 30-year fixed rate jumping to 7.24%. This is their highest point since late 2023.

At the same time, home prices are up more than 5% from the same time last year and appreciation doesn’t appear to be slowing. NAR predicts that home prices will increase by 1.8% in 2024 to a new all-time high of $396,800, followed by another 1.8% jump in 2025.

With inventory lacking, competition is keeping homeownership expensive and pricing many Americans out of the market. Those with low rates locked in during the pandemic are beginning to move out of necessity, but some are losing big on their sales. More than 40% of homeowners say they could not afford the home they currently own if they were on the market for it today.