Pending home sales maintained a high level, but dipped slightly in March due to the low inventory of homes for sale, according to the latest report from the National Association of Realtors.

The Pending Home Sales Index. A forward-looking indicator based on contract signings, dipped 0.8% in March to 111.4, down from 112.3 in February. However, the index is still 0.8% above last year.

“Home shoppers are coming out in droves this spring and competing with each other for the meager amount of listings in the affordable price range,” NAR Chief Economist Lawrence Yun said.

“In most areas, the lower the price of a home for sale, the more competition there is for it,” Yun said. “That’s the reason why first-time buyers have yet to make up a larger share of the market this year, despite there being more sales overall.”

Not only are home sales driving down home sales, but Yun also said home price growth could become even more heightened in the months ahead. Homes sold at near record pace, and 42% of homes sold at or more than asking price.

Already, the most recent Case-Shiller report showed home prices increased to their fourth-consecutive all-time high in February. 

“Sellers are in the driver’s seat this spring as the intense competition for the few homes for sale is forcing many buyers to be aggressive in their offers,” Yun said. “Buyers are showing resiliency given the challenging conditions.”

“However, at some point – and the sooner the better – price growth must ease to a healthier rate,” he said. “Otherwise sales could slow if affordability conditions worsen.”

Mortgage rates had been on a downward streak until this week, when the 30-year fixed rate mortgage once again increased, making homebuying that much less affordable, according to this week's survey from Freddie Mac

Yun forecasts existing home sales will total 5.64 million this year, an increase of 3.5% from 2016’s 5.45 million. He predicted the national median home price will rise 5% year-over-year.

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