In a promising sign for the spring housing market, pending home sales in the United States experienced a substantial jump of 6.1% in March, according to a report released today by the National Association of Realtors (NAR). This marks the largest month-over-month increase since December 2023, when pending sales rose by 7.0%.
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, climbed to 76.5 in March. Despite this strong monthly gain, pending transactions remained slightly below year-ago levels, decreasing by 0.6%. An index of 100 represents the level of contract activity seen in 2001.
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The regional breakdown of the data revealed a mixed picture. While the Northeast saw a slight dip of 0.5% in pending sales compared to February, the Midwest, South, and West all experienced increases. The South led the way with a significant surge of 9.8%.
Year-over-year, the Midwest was the only region to see an increase in contract signings, rising by 1.4%. The Northeast, South, and West all experienced declines compared to March 2024, with the Northeast registering the most significant drop of 3.0%.
NAR Chief Economist Lawrence Yun attributed the positive momentum to recent easing in mortgage rates. “Home buyers are acutely sensitive to even minor fluctuations in mortgage rates,” Yun stated. “While contract signings are not a guarantee of eventual closings, the solid rise in pending home sales implies a sizable build-up of potential home buyers, fueled by ongoing job growth.”
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Mortgage rates saw a welcome decrease in March, falling by approximately 20 to 30 basis points from the averages seen in January and February. The average mortgage rate in March was 6.65%, down from 6.96% in January and 6.84% in February.
Looking ahead, Yun noted the typical seasonal trends in the housing market. “Consumers should note that the spring homebuying season typically brings in a surge of home buyers and sellers compared to the winter months,” he explained. “In March, signed contracts surged 34.1% from February based on non-seasonally adjusted raw data, reflecting a pattern consistent with previous years. In addition, inventory levels rose by 8.1% in March from the prior month, indicating a more dynamic housing-market environment.”
Regional Breakdown:
- Northeast: PHSI decreased 0.5% from last month to 62.5, down 3.0% from March 2024.
- Midwest: PHSI increased 4.9% from last month to 77.7, up 1.4% from March 2024.
- South: PHSI soared 9.8% from last month to 94.1, down 0.4% from March 2024.
- West: PHSI increased 4.8% from last month to 58.6, down 2.0% from March 2024.
This latest report suggests a potential revitalization of the housing market as the spring buying season gets underway, fueled by slightly lower mortgage rates and increasing inventory. However, the year-over-year declines in several regions indicate that affordability challenges may still be a factor for many prospective homebuyers.
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