Pending home sales continued to rise in March, according to the most recent data from the National Association of Realtors. Contract activity rose unevenly in six of the past nine months, NAR said.
NAR’s Pending Home Sales Index, which is based on contract signings, rose 5.1% in March. The index is 11.4% below that of March 2010, but NAR attributes elevated activity in March and April of 2010 to the contract deadline for the home buyer tax credit.
“Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24% and demonstrate the market is recovering on its own,” said Lawrence Yun, NAR chief economist. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.” The activity in home sales has been uneven, but shows improvement, he said.
Regionally, the index fell 3.2% in the northeast and rose 3% in the midwest. In the south, pending home sales gained 10.3%, and the west saw an increase of 3.1%. All regions are still showing a decline year-over-year.
“Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5% to 10% this year with sales growth of lower priced homes likely to outperform high-end homes. That means the price trend will reflect more homes sold in the lower price ranges,” Yun said.
“The good news is that recent home buyers are staying well within budget, leading to exceptionally low loan default rates among home buyers over the past two years,” he added.
Read more about NAR’s Pending Home Sales Index with additional commentary from NAR Chief Economist Lawrence Yun.
Written by Elizabeth Ecker