Pending home sales increased by 3.4% in March compared to February despite rising mortgage rates, according to data released Thursday by the National Association of Realtors (NAR). Sales were essentially flat compared to one year ago.
NAR’s Pending Home Sales Index increased to 78.2 in March, up from 75.6 in February and good for its highest reading in a year. The Northeast, South and West regions posted monthly gains in transactions while the Midwest recorded a loss. Year over year, the Northeast and the South registered decreases but the Midwest and the West posted gains.
“March’s Pending Home Sales Index — at 78.2 — marks the best performance in a year, but it still remains in a fairly narrow range over the last 12 months without a measurable breakout,” NAR chief economist Lawrence Yun said in a statement. “Meaningful gains will only occur with declining mortgage rates and rising inventory.”
New-home sales jumped by 8.8% between February and March, reaching a seasonally adjusted annual rate of 693,000 units. Meanwhile, existing-home sales receded by 4.3% during the month to a seasonally adjusted annual rate of 4.19 million, down from a pace of 4.38 million in February. Existing-home inventory in March improved 14.4% relative to one year prior, but existing-home prices also hit a record high, according to Realtor.com.
At the beginning of the year, the NAR forecast that there would be 4.46 million home sales in 2024, a 9% increase from 2023. But the significant pent-up demand for homeownership across the country is hampered by elevated mortgage rates and high home prices.
“First-time homebuyers are having the hardest time,” Bright MLS chief economist Lisa Sturtevant said in a statement. “The number of buyers who are bringing all cash to the transactions has been on the rise.
“Some of these all-cash buyers are investors, but the majority are repeat homebuyers who are able to roll equity from a home sale into their next purchase. These buyers are much less sensitive to mortgage rates and will be better positioned to remain in the market this spring.”
Luxury buyers have also been resilient, Sturtevant added.
During the three months ending Feb. 29, nearly half (46.8%) of luxury homes sold were purchased in cash, up from 44.1% during the same period a year ago. That’s the highest share in at least a decade, Redfin reported.
