U.S. Pending Home Sales Pull Back 0.8% In March

After reporting a sharp increase in U.S. pending home sales in the previous month, the National Association of Realtors released a report on Thursday showing a pullback in pending sales in the month of March.

NAR said its pending home sales index fell by 0.8 percent to 111.4 in March after jumping by 5.5 to 112.3 in February. Economists had expected pending home sales to drop by 1.0 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Despite the monthly decrease, NAR said the pending home sales index is up by 0.8 percent compared to a year ago.

NAR chief economist Lawrence Yun said sparse inventory levels caused the pullback in pending sales in March but noted activity was still strong enough to be the third best in the past year.

"Home shoppers are coming out in droves this spring and competing with each other for the meager amount of listings in the affordable price range," Yun said. "In most areas, the lower the price of a home for sale, the more competition there is for it."

He added, "That's the reason why first-time buyers have yet to make up a larger share of the market this year, despite there being more sales overall."

The report showed notable decreases in pending home sales in the Northeast and West, as pending sales fell by 2.9 percent in both regions.

Pending home sales in the Midwest also declined by 1.2 percent, while pending sales in the South rose by 1.2 percent.

Yun forecast existing home sales to be around 5.64 million this year, reflecting an increase of 3.5 percent from 5.45 million last year.

The national median existing home price this year is expected to increase around 5 percent, NAR said. Last year, existing home sales increased 3.8 percent and prices rose 5.1 percent.