March Pending Home Sales Add 1.4%, Drop in the West

The National Association of Realtors (NAR) Wednesday morning released its data on pending sales of existing homes for March. The pending home sales index rose 1.4 points to 110.5 from a downwardly revised February reading of 109. The March reading is also up 1.4% year over year.

The consensus estimate called for a month-over-month increase of 0.5% in pending sales to a reading of 109.1. The index reflects signed contracts, not sales closings. An index reading of 100 equals the average level of contract signings during 2001.

The index has been above 100 (the “average” reading) for 19 straight months.

The NAR’s chief economist noted:

Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March. This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing and are taking away some of the sting from home prices that are still rising too fast and above wage growth.

Demand is starting to weaken in some areas, particularly in the West, where the median home price has risen an astonishing 38 percent in the past three years. As a result, pending sales in the region have now declined in four of the last five months and are lower than one year ago for the third month in a row. Closed sales in the region in March were also below last year’s pace.

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2016 existing home sales are forecast rise about 2.4% to around 5.38 million, up from a pace of 5.34 million in 2015. The national median existing home price for all of this year is expected to rise by 4% to 5%. In 2015, existing home sales rose 6.3% and prices rose 6.8%.

By region, March pending home sales increased by 3.2 points to an index score of 97 in the Northeast, 18.4% higher than in March of 2015. In the South, sales rose by 3.0 points to an index score of 125.4, but remain 0.6% lower than the March 2015 index.

Sales declined by 1.8 points in the West to an index score of 95.3, and they are now down 7.9% compared with March 2015. Sales in the Midwest ticked up 0.2 points to a March index score of 112.8, now 4% higher than March 2015.