Thanks to some underwhelming home sales data, it initially looked like the usually robust Spring homebuying season would be unusually subdued this year. But new data shows that the fears of a slowdown may have been overblown.
New data from the Nation Association of Realtors shows that pending home sales, an indicator of future home sales based on signed real estate contracts, rose in March. The increase, albeit a slight one of 1.9% over February, reverses a trend of two straight months of declines in pending home sales.
The increase in pending home sales indicates that actual home sales data will likely rise over the next few months.
The increase comes on the heels of a big month of March for new home sales, which saw sales of new homes have the best month in more than 14 years.
Lawrence Yun, NAR's chief economist, said that this trend is likely to continue.
"The increase in pending sales transactions for the month of March is indicative of high housing demand," Yun said. "With mortgage rates still very close to record lows and a solid job recovery underway, demand will likely remain high."
Yun also pointed to a looming increase in newly built homes coming onto the market, which should help with inventory constraints.
"Low inventory has been a consistent problem, but more inventory will show up as new home construction intensifies in the coming months, as well as from a steady wind-down of the mortgage forbearance program," Yun added. "Although these moves won't immediately replenish low supply, they will be a step forward."
Overall, NAR expects existing-home sales to rise by 10% in 2021 over 2020’s figures, while the median nationwide home price is expected to rise by 9% to $323,900.