More Americans than forecast signed contracts to purchase previously owned homes in March, an encouraging sign as the housing market was entering its busiest selling season of the year.
The index of pending home resales climbed 1.4% to a 10-month high
Steady hiring and borrowing costs still close to record lows are conducive to purchases, especially at the entry level part of the market. The advance in pending sales in March helps lay the ground for a pickup in demand for previously owned properties in coming months, sustaining the housing rebound.
"Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets," NAR chief economist Lawrence Yun said in a statement. "This spring's surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing and are taking away some of the sting from home prices that are still rising too fast and above wage growth."
Estimates in the Bloomberg survey ranged from a drop of 1.5% to a rise of 2%. The Realtors' group previously reported the February reading as a 3.5% gain.
Three of four regions saw an increase, the report showed. That included a 3.2% advance in the Northeast, a 3% pickup in the South and a 0.2% gain in the Midwest. Pending purchases fell 1.8% in the West.
Compared with a year earlier, the index increased 2.9% on an unadjusted basis, after a 5% gain in the prior 12-month period. It was projected to climb 0.8%, according to the Bloomberg survey median.
The pending sales gauge was 110.5 on a seasonally adjusted basis, the highest since May of last year. A reading of 100 corresponds to the average level of contract activity in 2001, or "historically healthy" home-buying traffic, according to the NAR.
Economists consider pending sales a leading indicator because they track contract signings. Purchases of previously owned homes are tabulated when a deal closes, typically a month or two later.
Resales make up more than 90% of the housing market, with new-house purchases accounting for the rest. Recent figures were mixed. Sales of existing dwellings rose more than projected in March. Purchases of new residential properties declined for a third month.
