Pending home sales up for the second month in a row in March.
March saw a continuation of positive returns on pending home sales, with an 3.4% increase in contract activity from April. This was a very slight 0.1% increase from March 2023. Three out of the four regions saw an increase, according to the Pending Home Sale Index (PHSI) released by the National Association of Realtors® (NAR). Only the Midwest posted a negative number in March.
The nationwide PHSI increased to 78.2 in March. An index of 100 is equal to the level of contract activity in 2001. Here’s how the numbers broke out by region:
- Northeast: up 2.7% to 65.1, down 0.3% from March 2023
- Midwest: down 4.3% to 78.1, up 1.3% from March 2023
- South: up 7.0% to 95.8, down 1.5% from March 2023
- West: up 6.5% to 61.0, up 3.6% from March 2023
"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."
This uptick in contract activity suggests that more buyers may be looking to buy. Make sure that you’re ready to move quickly and beat the competition. Start by getting preapproved.
Updates to 2024 outlook
Also contained in this report, the NAR updated their projections for this year as well as long term views of 2025. "Home sales have lingered at 30-year lows, and since 70 million more Americans live in the country now compared to three decades ago, it's inevitable that sales will rise in coming years. 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," predicts Yun.
They are now projecting:
A 9% increase in existing-home sales in 2024 (from 2023) to 4.46 million
- This is down from a 13% increase they projected in January
- Also forecasting a 13.2% increase in 2025 (from 2024) to 5.05 million
A 1.8% increase in annual median home price, to $396,800, in 2024
- They had been projecting a 1.4% increase in January
- A further increase to $403,800 in 2025
A 1.2% increase in housing starts (construction of new homes) in 2024 to 1.43 million (from 1.413 million in 2023)
- A 4.9% increase to 1.5 million in 2025
"Home prices are expected to rise roughly in line with consumer price inflation and wage growth over the next two years," added Yun. "Most homeowners are on strong financial footing in current market conditions, with only 2% of sales classified as being distressed.
"Job gains, steady mortgage rates and the release of inventory from pent-up home sellers will lead to more sales. Given the lingering housing shortage, home prices will march higher, albeit much more slowly than in the past."
An optimistic outlook
Yun sees the housing market loosening up a bit as we get further away from the pandemic and the record low mortgage rates that accompanied it.
"Inventory will gradually rise from recent growth in home building,” Yun predicts. “Additionally, many sellers who delayed listing in the past two years will start putting their homes on the market to move to a different home that better fits their new life circumstances – such as changes in family composition, jobs, commuting patterns and retirees wanting to be closer to their grandkids."
This is good news for housing inventory, and especially the first-time homebuyers who are having a hard time finding properties in their budget. Working with a local loan officer can help you make the most of current market conditions.
Source: https://www.nar.realtor/newsroom/pending-home-sales-ascended-3-4-in-march
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