Pending home sales continued their upward trajectory and increased for the third month straight, staying at the highest level since June 2013, according to the most recent report from the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, grew 1.1% to 108.6 in March from an upward revision of 107.4 in February and is now 11.1% above March 2014 (97.7).
The index has now increased year-over-year for seven consecutive months and is at its highest level since June 2013, when it was 109.4.
Lawrence Yun, NAR chief economist, says contract signings picked up in March as more buyers than usual entered this year’s competitive spring market.
“Demand appears to be stronger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year,” he said. “While contract activity being up convincingly compared to a year ago is certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news. It indicates this year’s activity is being driven by more long-term homeowners.”
Yun expects a gradual improvement in home sales in the months ahead but says insufficient supply and accelerating prices could be a drawback to sales reaching their full potential.
“Demand in many markets is far exceeding supply, and properties in March sold at a faster rate than any month since last summer,” he said. “This in turn has pushed home prices to unhealthy levels – nearly four or more times above the pace of wage growth in some parts of the country. Simply put, housing inventory for new and existing homes needs to improve measurably to improve affordability.”