Pending home sales increased for the second consecutive month in March, but activity remains below the prior year with supply constraints becoming an issue, according to the National Association of Realtors (NAR).
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The Pending Home Sales Index inched up 0.4% to 107.6 in March from a downwardly revised 107.2 in February. On an annual basis, the index decreased 3% for the third straight month.
Lawrence Yun, NAR chief economist, noted that despite a strong economy, the housing market is moving sideways.
“Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory,” he said. “What continues to hold back sales is the fact that prospective buyers are increasingly having difficulty finding an affordable home to buy.”
Looking forward to the upcoming peak home sales months, Yun believes affordability will be a significant issue when it comes to home sales rates breaking above the previous year’s levels with price appreciation in most markets outpacing incomes, while higher mortgage rates are also impacting buyers’ budgets.
But, Yun forecasts for existing-home sales in 2018 to be around 5.61 million – up from 1.8% in 2017.
