Pending home sales were undercut by low supply in March, ticking down 0.8 percent in the National Association of REALTORS® (NAR) recently released Pending Home Sales Index (PHSI). The PHSI posted 111.4 in March, down from 112.3 in February.
“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,” says Lawrence Yun, chief economist at NAR. “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.”
The South saw the only upward activity in March, rising 1.2 percent to an Index reading of 129.4. Readings for both the Northeast and South fell 2.9 percent, to 99.1 and 94.5, respectively. The reading for the Midwest fell 1.2 percent to 109.6.
Per data from NAR, 42 percent of homes sold in March sold at or above list price—and according to Yun, home prices will keep escalating as long as the low supply saga wages on.
“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,” Yun says. “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.”