Pending home sales fall for first time since November

The number of homes under contract declined last month for the first time since November, according to data released by the National Association of Realtors (NAR) on Thursday. 

Pending home sales, a forward-looking housing market indicator, fell by 5.2 percent month-over-month in March, while dropping by 23.2 percent from a year ago. 

Three out of four regions experienced monthly decreases, and all four declined from the previous year. 

“The lack of housing inventory is a major constraint to rising sales,” said NAR Chief Economist Lawrence Yun. “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.” 

Builder activity also fell last month, according to recent Commerce Department data. Housing starts dropped last month by 0.8 percent, led by a marked decline in multifamily construction. 

Yet both permits and single-family construction experience an increase. Single-family starts rose by 2.7 percent from a month earlier to an annual rate of 861,000 units.

Permits for single-family homes were up by 4.1 percent month-on-month to an 818,000 unit rate, although they were down by nearly 30 percent from the same time last year.   

Meanwhile, Yun expects sales to pick up in the back half of the year should mortgage rates fall and job gains continue.  

“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,” he added. 

Separate figures released by the Census Bureau earlier this week showed that sales of new single-family homes rose for the fourth straight month. 

Sales of new single-family homes increased by 9.6 percent above the revised rate from a month earlier to a seasonally adjusted rate of 683,000 units.

Sales ticked up in the Northeast, Midwest and West. Sales were down 3.7 percent from 707,000 at the same point last year. 

The seasonally adjusted number of new homes for sale at the end of March was 432,000, which means the supply of new homes would last nearly eight months at the current sales rate.