Much to the surprise of economic insiders, the gross domestic product or GDP rose +3.2% in March 2019, according to the Bureau of Economic Analysis. Average consumer spending in March increased +0.6%. Equally surprising to many housing insiders, pending home sales increased by +3.8% in March 2019, according to the National Association of REALTORS® (NAR).
Pending home sales are often considered key indicators of housing market strength as well as future trends. NAR indicated that lower mortgage rates encouraged more buyers to enter the market.
NAR’s Pending Home Sales Index rose to 105.8 in March 2019 from 101.9 in February 2019. This was the first increase in pending home sales since mid 2018 when the housing market markedly began cooling. Year-to-year contract signings were down -1.2%, the 15th consecutive month of annual declines.
Take a look at NAR’s Pending Home Sales Index by region:
- Northeast – a decline of -1.7% to 90.5; down -0.4% from March 2018
- Midwest – an increase of +2.3% to 95.3; down -5% from March 2018
- South – an increase of +4.4% to 127.1; up by +0.7% from March 2018
- West – an increase of +8.7% to 95.1; down -1.6% from March 2018
Pending home sales in the West have been relatively stable during the last five consecutive months but this spike of pending sales was most welcomed after some steep drops and more than usual volatility.
Lawrence Yun, the chief economist with NAR, said “We are seeing a positive sentiment from consumers. Mortgage applications have been steadily increasing and mortgage rates are extremely favorable.”
Despite currently underperforming home sales, Yun is quite optimistic. “In the year 2000, we had 5M home sales. Today, we are close to that same number but there are 50M more people in the country. Clearly, there is a pent-up demand in the market and we should see a better performing market in the coming quarters and years.”