Pending sales rose 1.1 percent month-over-month in March and are 11.1 percent above year-ago levels, according to NAR's Pending Home Sales Index, a forward-looking indicator based on contract signings.
"Demand appears to be stronger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year," says Lawrence Yun, NAR's chief economist. "While contract activity being up convincingly compared to a year ago is certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news. It indicates this year's activity is being driven by more long-term home owners."
However, Yun cautions that insufficient inventory and accelerating home prices could be a drawback to sales reaching their full potential.
"Demand in many markets is far exceeding supply, and properties in March sold at a faster rate than any month since last summer," Yun says. "This, in turn, has pushed home prices to unhealthy levels — nearly four or more times above the pace of wage growth in some parts of the country. Simply put, housing inventory for new and existing homes needs to improve measurably to improve affordability."
Here's a closer look at the Pending Home Sales Index across the country:
- South: Contract signings rose 4 percent in March and are 12.4 percent above year-ago levels.
- West: Contract signings increased 1.7 percent in March and are 15.6 percent higher than March 2014.
- Northeast: Contract signings fell 1.5 percent for the fourth consecutive month but remain 0.6 percent above a year ago.
- Midwest: Contract signings decreased 2.5 percent in March but are 11.3 percent above year-ago levels.