A sale sign is posted outside a home for sale in San Anselmo, California.
Justin Sullivan | California
According to the National Association of Realtors, outstanding home sales, a measure of the number of existing home contracts signed, rose 1.9% in March versus April.
Forecasters had expected an increase of 5%.
Pending sales were 23.3% higher than in March 2020, but that yearly comparison is heavily skewed as the real estate market essentially stalled last March at the start of the coronavirus pandemic. The market then rebounded strongly last summer and is still showing incredibly solid demand.
Pending home sales is a forward-looking indicator of completed sales in one to three months.
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“Low inventory has been a persistent problem, but more inventory will show up as new home construction picks up in the coming months and mortgage-forbearance programs steadily end,” said Lawrence Yun, brokers’ chief economist. “Although these measures do not replenish the low supply immediately, they will represent a step forward.”
Already sky-high property prices continue to rise at a rate that has not been seen in more than 15 years. The strong demand and the record low supply lead to nationwide bidding wars.
Potential buyers have lost purchasing power due to rising mortgage rates, which have risen steadily since the beginning of the year and especially in March. The average contract rate for the popular 30-year fixed-rate mortgage started the month at 3.22% and ended at 3.45%, according to Mortgage News Daily. It started the year at 2.76%.
“Today’s surge signals high demand for home buyers and suggests that where buyers find sellers, home sales will happen,” said Danielle Hale, chief economist at realtor.com. “Data shows that while we saw an increase in new sellers in April, we still did not see as many as in the last few years before the pandemic.”
Despite the surge in vaccinations, Hale said, according to her surveys, potential sellers are still skeptical about letting people view their homes as health concerns mean that some sellers are not in the market, among other things.
In the region, home sales rose 6.1% in the Northeast and 3.7% in the Midwest over the month. In the south, monthly sales increased by 2.9%. In the west, sales in March rose 2.9% compared to February.
New home sales in March, which can also be measured by the contracts signed, increased by well over 21% month on month as buyers, frustrated by the lack of homes for sale, have now moved to new home.
Brokers forecast a 10% increase in existing home sales in 2021 to 6.2 million in 2021, while median home prices are projected to increase 9% to $ 323,900 in 2021.