Contract signings rose 1.4 percent in March

Contract signings increased slightly in March for the second consecutive month and reached their highest level in almost a year, a sign the spring buying season is off to a solid start, a new report showed on Wednesday. 

Pending home sales rose 1.4 percent to 110.5 in March, from 109 in February, and are 1.4 percent above the March 2015 level, according to the National Association of Realtors.

{mosads}The NAR’s sales index has increased for 19 consecutive months year-over-year and is at its highest level since May 2015, the NAR report said.

“Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March,” said NAR chief economist Lawrence Yun.

“This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing and are taking away some of the sting from home prices that are still rising too fast and above wage growth,” Yun said. 

Only the West region saw a decline in contract activity last month.  

The healthy labor market and low borrowing costs is expected to bolster demand and sales in the coming months. 

But Yun cautioned that the dearth of new single-family homes in areas with fast jobs growth is driving up prices and could hamper growth in areas like the West.

“Demand is starting to weaken in some areas, particularly in the West, where the median home price has risen an astonishing 38 percent in the past three years,” Yun said.

“As a result, pending sales in the region have now declined in four of the last five months and are lower than one year ago for the third month in a row,” he said. 

The index in the Northeast increased 3.2 percent, sales were up 0.2 percent in the Midwest and rose 3 percent in the South.

Sales in the West declined 1.8 percent in March.