The Pending Home Sales Index inched up 0.4 percent to 107.6 in March from a downwardly revised 107.2 in February. Even with last month’s increase in activity, the index declined year-over-year (3.0 percent) for the third straight month.
Lawrence Yun, NAR chief economist, says that despite the strong job-creating economy, contract activity is not seeing an increase. “Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the continued lack of inventory,” he said. “Steady price growth and the swift pace listings are coming off the market are proof that more supply is needed to fully satisfy demand. What continues to hold back sales is the fact that prospective buyers are increasingly having difficulty finding an affordable home to buy.”
Yun anticipates the multiple winter storms and cold weather contributed to the decrease in contract signings, particularly in the Northeast. Looking ahead, Yun believes that affordability will be a significant topic of discussion and driving factor if overall activity can move above year ago levels. Price appreciation in most markets continues to outpace incomes, and the recent increase in mortgage rates to over a four-year high only adds to the budget constraints aspiring buyers are experiencing in recent months.
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