US Pending Home Sales Rise 1.5%
Pending home sales (signed home purchase contracts) in the US rose for the second straight month in March, driven by an improving supply of homes despite rising borrowing costs. The contract signings index rose 1.5% to 73.7, a four-month high, surpassing the consensus estimate of 0.5% based on a Bloomberg survey of economists.
The National Association of Realtors (NAR) believes this increase indicates that pent-up demand remains in the housing market. NAR Chief Economist Lawrence Yun said that purchase contracts are rising despite higher mortgage rates, and the increase in the home inventory will help translate that buying interest into actual sales.
However, financing conditions are becoming more challenging as the spring selling season approaches. The average 30-year mortgage rate rose above 6.5% at the end of the month, the highest since August, as rising energy costs fueled inflation concerns related to the Iran war. At the same time, an indicator of home buying conditions from the University of Michigan survey deteriorated after reaching a nearly two-year high in February.
Regionally, pending home sales strengthened the most in the South (the largest market), rising 3.9% in March. The Northeast also rose 4.4%, while the Midwest and West weakened, indicating an uneven demand recovery.
Pending home sales data is typically a leading indicator of existing home sales because homes typically go into contract one to two months before the transaction closes. The National Arbitration Agency (NAR) is scheduled to release April existing-home sales data on May 11, which will confirm whether the increase in contracts in March actually resulted in closings. (gn)*
Source: Newsmaker.id
