NAR: Pending Home Sales Declined 5.2% in March

According to the National Association of REALTORS, pending home sales fell in March for the first time since November 2022.

Three US areas saw monthly losses, while the South saw a rise. Transactions fell in all four regions year over year.

In March, the Pending House Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, fell 5.2% to 78.9. Pending transactions fell by 23.2% year on year.

A score of 100 represents the degree of contract activity in 2001.

“The lack of housing inventory is a major constraint to rising sales,” NAR Chief Economist Lawrence Yun stated.

“Multiple offers are still occurring on about a third of all listings, and 28% of homes are selling above list price. Limited housing supply is simply not meeting demand nationally.”

According to NAR, the economy will continue to add employment, albeit at a slower pace, and mortgage rates will fall, with the 30-year fixed mortgage rate decreasing to 6.0% this year and 5.6% in 2024.

Housing starts will dip 7.3% from last year to 1.44 million in 2023, then rise 6.9% to 1.54 million in 2024.

“Sales in the second half of the year should be notably better than the first half as job gains continue and more favorable mortgage rates are expected,” Yun continued.

“Sales of new homes are already matching 2019 pre-COVID activity and are expected to increase in 2023, largely due to plentiful inventory in this segment of the market.”

With ongoing employment gains and improving borrowing rates, the National Association of Realtors predicts that existing-home sales will climb steadily in the following months but will fall short of the annual number.

Existing-home sales will fall 9.3% from the previous year in 2023 to 4.56 million, before jumping 15.4% to 5.26 million in 2024.

Due to more ample inventory in this section of the market, new house sales will climb by 4.5% in 2023, to 670,000, and by another 11.9% in 2024, to 750,000.

In comparison to last year, NAR predicts that median existing-home prices will generally stabilize, with the national median existing-home price falling 1.8% to $379,600 in 2023 and then rising 2.8% to $390,000 in 2024.

The pricey West region of the United States will see decreased pricing, but the affordable Midwest region will likely see a rise.

The median new home price will fall by 1.9% in 2023 to $449,100, before rising by 4.2% in 2024 to $468,000.

Pending Home Sales Regional Breakdown

• The Northeast PHSI declined 8.1% from the previous month to 66.6, representing a 24.3% drop from March 2022.
• The Midwest index fell 10.7% to 75.7 in March, down 21.5% from the previous year.
• The South PHSI rose 0.2% to 99.6 in March but was down 19.8% from the previous year.
• The West index fell 8.0% in March to 59.4, a 32.2% decline from March 2022.