Housing Shortages Are Curbing Sales
Pending home sales took a slight dip last month due to a dearth of homes for sale, the National Association of REALTORS® reported Thursday. The South was the only major region of the U.S. to see an increase in contract signings last month.
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Despite last month’s national dip, pending home sales still remain elevated overall, posting the third best reading in the past year, according to NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings. Signings fell 0.8 percent in March to a reading of 111.4 on the index, but remain 0.8 percent above year-ago levels.
“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,” says Lawrence Yun, NAR’s chief economist. “In most areas, the lower the price of a home for sale, the more competition there is for it. 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.”
Yun says the “painfully low supply” of homes for sale this spring could cause home prices to accelerate even more. Price growth was at 6.8 percent last month, NAR reports. Further, homes in March sold at a near-record price, and 42 percent of homes sold at or above list price.
“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 says. “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. Otherwise, sales could slow if affordability conditions worsen.”
The South was the only major region of the U.S. to see an uptick last month, with pending home sales rising 1.2 percent to an index reading of 129.4. Pending home sales are now 3.9 percent above last March in the South, NAR’s index shows.
Pending home sales dropped 2.9 percent in the Northeast to a 99.1 reading in March, but are still 1.8 percent higher than a year ago. The Midwest saw pending home sales fall 1.2 percent in March to a reading of 109.6. Pending sales are now 2.4 percent lower than a year ago. The West also posted a drop last month, with the region’s index reading falling 2.9 percent to 94.5. Pending sales in the West are now 2.7 percent below a year ago.