Pending home sales fall for the first time since November
The numbers: US home contract signings fell for the first time since last November, as buyers faced a tough market in March due to a lack of housing supply.
Pending U.S. home sales fell 5.2% in March, according to the monthly index released Thursday by the National Association of Realtors (NAR).
Sales fell for the first time since November 2022. At the time, buyers pulled back sharply as mortgage rates topped 7%.
Sales fell much more than Wall Street expected in March. Economists polled by the Wall Street Journal expected a 0.5% increase in pending home sales.
Pending home sales reflect transactions where the contract for the sale of an existing home has been signed, but the sale has not yet closed. Economists see it as an indicator of the direction of existing home sales in the coming months.
Key details: Compared to the previous year, transactions decreased by 23.2%.
On a monthly basis, only the US South saw a 0.2% increase in pending home sales.
The NAR said a third of all home listings saw multiple offers, and 28 percent sold above list price. Brokers also predict that the 30-year mortgage rate will drop to 6% this year and to 5.6% in 2024.
The big picture: Buyers, already sensitive to mortgage interest, are further hurt by the underlying structural problem of low inventory. Some turned to new homes, increasing sales for builders. But expensive houses and high interest rates on mortgages will push up apartment prices for the year, Vanguard believes, at a rate of up to 5% from year to year.
What the brokers said: "The lack of housing stock is a major constraint to an increase in sales," said NAR Chief Economist Lawrence Yoon. "Limited housing supply simply does not meet the national demand".
Yoon expects existing home sales to decline on a year-over-year basis in 2023 by 9.3% to 4.56 million.
After that, he added, sales would rebound, rising 15.4% to 5.26 million.
Market reaction: US stocks rose in early trading on Thursday. The yield on the 10-year treasury bill rose above 3.5%.
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