Pending Home Sales Hit Highest Level in Almost a Year
April 27 2016 - 9:40AM
Dow Jones News
The number of homes that went under contract in March reached
the highest level in nearly a year, a sign the housing market is
gaining steam as Americans benefit from historically low interest
rates and steady job growth.
Pending sales of previously owned homes, reflecting contract
signings, rose 1.4% last month from February, the National
Association of Realtors said Wednesday.
The sales index climbed to 110.5, the highest level since last
May. An index of 100 is equal to the average level of contract
activity during 2001, which the NAR considers a "normal," or
balanced, market for the current U.S. population.
Economists surveyed by The Wall Street Journal expected pending
home sales to rise 0.5% in March.
Pending sales provide a more up-to-date checkup of the housing
market than other measures because they are based on contract
signings, the earliest stage of the sales process. It can take
weeks and even months for sales to become final, or to "close."
Some contracts are later canceled for a variety of reasons.
The pickup in pending sales is the latest sign the housing
market continues to advance after posting solid growth in 2015.
Pending sales in March climbed 1.4% compared with a year
earlier.
"Despite supply deficiencies in plenty of areas, contract
activity was fairly strong in a majority of markets in March,"
Lawrence Yun, the NAR's chief economist, said in a statement. "This
spring's surprisingly low mortgage rates are easing some of the
affordability pressures potential buyers are experiencing and are
taking away some of the sting from home prices that are still
rising too fast and above wage growth."
Mr. Yun warned, however, that the supply of homes on the market
remains tight and is starting to impede sales growth, mainly by
pushing up prices. He cited markets in the West, where the price of
a typical home has risen 38% in the past three years. Home
construction remains sluggish despite the rise in demand.
A more closely watched measure of the housing market is the
NAR's report on existing-home sales, which measure closed
transactions. Existing-home sales—or all purchases of previously
owned single-family homes, townhomes, and condominiums—rose 5.1% in
March from February to an annual rate of 5.33 million, the NAR
reported earlier this month. Sales were up 1.5% from the prior
year. Existing homes represent roughly 90% of the market.
Write to Josh Mitchell at joshua.mitchell@wsj.com
(END) Dow Jones Newswires
April 27, 2016 10:25 ET (14:25 GMT)
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