Contracts to buy existing homes rose for a third consecutive month in March, a sign the US housing market was gaining momentum heading into the spring season.
The pending home sales index, a forward-looking indicator of US home sales, rose 1.1 percent to 108.6 in March following an upward revision in February, the National Association of Realtors reported today. The median estimate of economists called for an increase of 1 percent.
Compared to March 2014, contracts to buy existing homes were up 11.1. That was the seventh consecutive month pending home sales were above year-ago levels.
March was also the eleventh consecutive month the pending home sales index was above 100.0, which represents the average level of contract activity.
“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,” said NAR chief economist Lawrence Yun in a statement. “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 homeowners.”
Last week the NAR said existing home sales made a large comeback in March, rising to the highest level in 18 months. Existing home sales climbed 6.1 percent to a seasonally adjusted 5.19 million, well above forecasts.
Separately, the Commerce Department said last week that new home sales declined 11.4 percent in March, reaching a seasonally adjusted annual rate of 481,000.
Low mortgage rates and a stable labour market will likely provide the necessary catalysts to keep home sales rising in the coming months. According to Freddie Mac, mortgage rates averaged 3.77 percent in March, well below year-ago levels.