Slightly more Americans signed contracts to buy homes in March, yet higher mortgage rates and a shortage of available houses are weighing on sales.
Christopher Rugaber of AP had the news:
The National Association of Realtors said Monday that its pending home sales index ticked up 0.4 percent last month to 107.6. It was the second straight increase, but the index is still 3 percent lower than it was a year ago.
Steady hiring and modest pay gains are lifting demand for homes. But rising mortgage rates, which reached the highest level in more than four years last week, are restraining sales. Purchases of existing homes ticked up in March but are still slightly below year-ago levels.
The number of houses available for sale has plunged 7.2 percent in the past year.
Harsh winter weather likely dragged down contract signings in the Northeast, where they fell 5.6 percent. Pending sales rose 2.4 percent in the Midwest and 2.5 percent in the South. They fell 1.1 percent in the West.
Diana Olick of CNBC reported that rising rents are also affecting home sales:
The biggest challenge in today’s housing market continues to be a severe shortage of homes for sale, especially at the lower end of the market, where demand is highest. There were about 9 percent fewer homes on the market in March compared to a year ago, pushing prices up 8 percent, according to Zillow. Homebuilders are also focused on the move-up, rather than entry-level market, as the cost of construction continues to rise.
Rents are also up 2.7 percent compared to a year ago, making it even harder for renters, especially millennials, to save for a down payment on a home.
“What continues to hold back sales is the fact that prospective buyers are increasingly having difficulty finding an affordable home to buy,” Yun said.
Sho Chondra reported that the sales increase was less than expected:
The latest results show that interested buyers continue to face a persistent shortage of affordable inventory that is driving up property prices faster than wage growth. Nonetheless, a solid job market and lower taxes are helping underpin demand for housing even as mortgage rates climb to an almost five-year high.
The NAR revised its annual sales forecast to 5.61 million existing homes this year, 1.8 percent more than in 2017. It previously projected sales would match last year’s 5.51 million.
NAR data released earlier this month showed existing-home sales climbed to a four-month high in March. The Realtors group said half of the houses sold were on the market for less than a month. The NAR has said it expects the market will remain tight until more institutional investors list their properties and more homeowners agree to sell their houses.