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Pending home sales tick up from February but 7.9% below March 2013

Biggest gains in the South, West

Pen signing mortgage paperwork

The National Association of Realtors pending home sales index rose 3.4% to 97.4 from an upwardly revised 94.2 in February, but is 7.9% below March 2013 when it was 105.7.

Lawrence Yun, NAR chief economist, said a gain was inevitable.

“After a dismal winter, more buyers got an opportunity to look at homes last month and are beginning to make contract offers,” he said. “Sales activity is expected to steadily pick up as more inventory reaches the market, and from ongoing job creation in the economy.”

The PHSI in the Northeast increased 1.4% to 78.8 in March, but is 5.9% below a year ago.

In the Midwest the index slipped 0.8% to 94.5 in March, and is 10.1% below March 2013. Pending home sales in the South rose 5.6% to an index of 112.7 in March, but are 5.3% below a year ago. The index in the West increased 5.7% in March to 91.0, but is 11.1% below March 2013.

Although home sales are expected to trend up over the course of the year and into 2015, this year began on a weak note and total sales are unlikely to match the 2013 level.

Chart: ZeroHedge

Low inventory, declining affordability and poor weather have hit the housing market in recent month.

Last month’s sales volume remained the slowest since July 2012, when it was 4.59 million, according to the National Association of Realtors.

Total existing-home sales slipped 0.2% to a seasonally adjusted annual rate of 4.59 million in March from 4.6 million in February, and are 7.5% below the 4.96 million-unit pace in March 2013.

Existing-home sales are expected to total just over 4.9 million this year, below the nearly 5.1 million in 2013. However, with ongoing inventory shortages in much of the U.S., the national median existing-home price is expected to grow between 6 and 7 percent in 2014.

March has had bad news -- sales of new single-family homes in March plummeted 14.5% to a seasonally adjusted annual rate of 384,000, hitting the lowest level since July 2013, the U.S. Census Bureau reported April 23. Sales of existing homes declined 0.2% in March to a seasonally adjusted annual rate of 4.59 million, the slowest it’s been since July 2012.

The March drop in new home sales was a year-over-year drop of 13.3%. The report showed there were drops in three of four U.S. regions.

By region, March's gauge of existing home sales rose 5.7% in the West, 5.6% in the South and 1.4% in the Northeast. Meanwhile, the gauge declined 0.8% in the Midwest.

Starting off with a weak first quarter, 2014's sales of existing homes will likely reach about 4.9 million, falling short of 5.1 million sales last year, according to NAR's forecast.

Yun expects some improvement in the months ahead.

“With ongoing job creation and some weather delayed shopping activity, home sales should pick up, especially if inventory continues to improve and mortgage interest rates rise only modestly," he said.

The median existing-home price for all housing types in March was $198,500, up 7.9% from March 2013. Distressed homes3 – foreclosures and short sales – accounted for 14% of March sales, down from 16% in February and 21% in March 2013.

“With rising home equity, we expect distressed homes to decline to a single-digit market share later this year,” Yun said.

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