The National Association of Realtors (NAR) Pending Home Sales Index reported contract signings fell 1.2% year-over-year in March, making March the 15th straight month of annual decreases.
The news wasn’t all gloom from NAR, however, as home sales increased 3.8% to 105.8 in March from February’s rate of 101.9. The index is based on a large national sample, typically representing about 20% of transactions for existing-home sales.
Lawrence Yun, Chief Economist for NAR, said that pending home sales data has been exceptionally fluid over the past several months but predicted that numbers will begin to climb more consistently.
"We are seeing a positive sentiment from consumers about homebuying, as mortgage applications have been steadily increasing and mortgage rates are extremely favorable,” Yun said.
The housing market on the West Coast saw a significant spike in March after leveling off to a stable rate for the previous five months. The Index for the West Coast increased 8.7% in March to 95.1.
"Despite some affordability issues in the West Coast, the numbers indicate that there is a reason for optimism. Inventory has increased, too. These are great conditions for the region,” Yun said.
First American Financial also released its February Real Housing Price Index this week and reported growing affordability in California. San Jose, Los Angeles, San Francisco, and San Diego, along with Seattle, Washington, and Portland, Oregon, were among the six cities that saw affordability increase the most in February.
The NAR’s report added that the Index in the Northeast declined 1.7% to 90.5 in March and is now 0.4% below a year ago. In the Midwest, the index grew 2.3% to 95.3 in March, 5.0% lower than March 2018. Pending home sales in the South jumped up 4.4% to an index of 127.2 in March, which is 0.7% higher than last March.
Yun said current sales activity is underperforming, despite pending contracts being on the upswing.
"In the year 2000, we had 5 million home sales. Today, we are close to that same number, but there are 50 million more people in the country," he said. "There is a pent-up demand in the market, and we should see a better performing market in the coming quarters and years."