FX.co ★ U.S. Pending Home Sales Surge 3.4% In March, Much More Than Expected

In March, U.S. pending home sales exceeded expectations greatly, as revealed in a report by the National Association of Realtors (NAR). The Association's pending home sales index emerged at 3.4 percent, hitting 78.2 in March, a significant climb from February's 1.6 percent increase to 75.6. This far outstripped economists' modest expectation of a 0.3 percent rise.

A pending home sale is defined as a sale where a contract has been signed but not finalized. Typically, it takes between four to six weeks to conclude a contracted sale.

"March's Pending Home Sales Index stands at 78.2, representing the highest performance in a year. However, it has hovered within a reasonably narrow range over the past 12 months without ever reaching a noticeable surge," NAR Chief Economist Lawrence Yun stated. "Substantial gains will only be achievable with decreasing mortgage rates coupled with climbing inventory."

The geographical areas driving this surge have been the South and West, where pending home sales soared by 7.0 and 6.8 percent, respectively. Meanwhile, the Northeast observed a 2.7 percent rise in pending home sales, while the Midwest saw a dip of 4.3 percent.

The Association anticipates existing sales to climb by 9.0 percent to 4.46 million in 2024, with an additional jump of 13.2 percent to 5.05 million predicted for 2025. "Given that there's been a static period at the 30-year lows for home sales, and that we have 70 million more Americans residing in the country in comparison to three decades ago, a surge in sales in the forthcoming years is inevitable," explains Yun.

In a separate report, the Commerce Department showed a significant rise in new home sales in March. There was an 8.8 percent jump to an annual rate of 693,000 in March, following a 5.1 percent drop to a revised rate of 637,000 in February, once again exceeding the economists' forecast of new home sales reaching an annual rate of 668,000 from the 662,000 previously reported for the prior month.