Pending home sales slipped 0.8% in March as only the South region registered a gain, the National Association of Realtors reported Thursday.
The Pending Home Sales Index declined to 111.4 in March from 112.3 in February. Despite the decrease, the index remained 0.8% above a year ago.
The PHSI in the Northeast decreased 2.9% to 99.1 in March, but is still 1.8% above a year ago. In the Midwest the index declined 1.2% to 109.6 in March, and is now 2.4% lower than March 2016. Pending home sales in the South rose 1.2% to an index of 129.4 in March and are now 3.9% above last March. The index in the West fell 2.9% in March to 94.5, and is now 2.7% below a year ago.
Lawrence Yun, NAR chief economist, blamed the decline on the shortage of homes for sale. “Home shoppers are coming out in droves this spring and competing with each other for the meager amount of listings in the affordable price range,” he said. “In most areas, the lower the price of a home for sale, the more competition there is for it. That’s the reason why first-time buyers have yet to make up a larger share of the market this year, despite there being more sales overall.”
Pointing to revealing data from the March Realtors Confidence Index, Yun said he worries that the painfully low supply levels this spring could heighten price growth – at 6.8% last month – even more in the months ahead. Homes in March came off the market at a near-record pace, and indicating an increase in the likelihood of listings receiving multiple offers, 42% of homes sold at or above list price (the second highest amount since NAR began tracking in December 2012).
“Sellers are in the driver’s seat this spring as the intense competition for the few homes for sale is forcing many buyers to be aggressive in their offers,” said Yun. “Buyers are showing resiliency given the challenging conditions. However, at some point – and the sooner the better – price growth must ease to a healthier rate. Otherwise sales could slow if affordability conditions worsen.”
Yun forecasts for existing-home sales to be around 5.64 million this year, an increase of 3.5% from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 5%. In 2016, existing sales increased 3.8% and prices rose 5.1%.
