Pending Home Sales Leveling Off as Tight Supplies Persist

Pending Home Sales Leveling Off as Tight Supplies PersistContract signings on home sales are leveling off because of limited inventories — not from less demand — as the housing market pushes through a modest growth period, according to the National Association of Realtors.
The NAR’s forward-looking Pending Home Sales Index rose 1.5 percent to 105.7 in March, from a downwardly revised 104.1 in February. It is 7.0 percent above March 2012, the NAR said today.
The index is based on contract signings, not closings. But tight supplies will keep closings at a moderate pace. The index is based on a large national sample, representing about 20 percent of transactions for existing-home sales.
Pending sales have been above year-ago levels for the past 23 months.
“Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply,” said Lawrence Yun, NAR chief economist. “Little movement is expected in near-term sales closings, but they should edge up modestly as the year progresses. Job additions and rising household wealth will continue to support housing demand.”
Total existing-home sales are projected to increase 6.5 to 7 percent over 2012 to nearly 5 million sales this year, while the national median existing-home price is forecast to rise about 7.5 percent.
The Pending Home Sales Index in the Northeast was unchanged at 82.8 in March and is 6.3 percent higher than March 2012.
In the Midwest, the index increased 0.3 percent to 103.8 in March and is 13.7 percent above a year ago.
Pending home sales in the South rose 2.7 percent to an index of 120.0 in March and are 10.4 percent higher than March 2012.
In the West the index increased 1.5 percent in March to 102.9 but is 4.3 percent below a year ago.

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