Pending home sales fell last month for the first time since November
By Anna Bahney, CNN
Pending home sales dropped in March, falling for the first time since November amid tight inventory and buyer uncertainty about the financial sector due to bank failures, according to data released Thursday by the National Association of Realtors.
The pending sales index, a forward-looking indicator based on signed contracts to buy a home rather than the final sales that are accounted for in existing home sales, dropped by 5.2% from February to March. Month over month, contract signings fell in three US regions, but increased slightly in the South.
Year-over-year pending transactions fell by 23.2%. Pending home sales retreated in all four regions compared to one year ago.
“The lack of housing inventory is a major constraint to rising sales,” said Lawrence Yun, NAR’s chief economist. “Multiple offers are still occurring on about a third of all listings, and 28% of homes are selling above list price. Limited housing supply is simply not meeting demand nationally.”
Updated housing forecast
NAR updated its housing forecasts and predicts that sales will pick up, home prices will stabilize and mortgage rates will improve in the rest of this year.
“Sales in the second half of the year should be notably better than the first half as job gains continue and more favorable mortgage rates are expected,” said Yun. “Sales of new homes are already matching 2019 pre-COVID activity and are expected to increase in 2023, largely due to plentiful inventory in this segment of the market.”
NAR’s forecast said the economy will continue adding jobs, even if it is at a slower pace, and mortgage rates will drop. Its estimate is that the 30-year fixed mortgage rate will progressively drop to 6% this year and to 5.6% in 2024. Housing starts will fall from last year by 7.3% in 2023, to 1.44 million, and then increase 6.9% in 2024, to 1.54 million, according to the updated forecast.
Job gains and improving interest rates are key to boosting sales of existing homes.
NAR projected that sales will see steady improvement in the coming months. But it said annual sales will drop in 2023 by 9.3% from 2022 to to 4.56 million. With mortgage rates projected to fall even more the next year, NAR forecast that sales will then jump by 15.4% in 2024, to 5.26 million.
Sales of newly constructed homes will increase by 4.5% in 2023, to 670,000, due to more plentiful inventory in this segment of the market, and increase by another 11.9% in 2024, to 750,000.
Home prices will stabilize, according to the forecast. The national median existing home price is expected to decrease by 1.8% in 2023, to $379,600. But because there is such strong demand, there is a floor to how far prices will fall. Median prices for existing homes are expected to rise again by 2.8% in 2024, to $390,000.
The median price of a new construction home in 2023 will drop by 1.9% to $449,100, followed by an improvement of 4.2% in 2024, to $468,000.
The most expensive region of the country — the West — will see lower prices, but the more affordable regions — like the Midwest — will likely squeak out a positive gain this year over last, according to the forecast.
The-CNN-Wire
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