(Kitco News) - Hopes for a stabilizing U.S. housing market were bolstered after the number of potential home buyers rose beyond expectations last month, according to the latest data from the National Association of Realtors (NAR).
The U.S. pending home sales index rose 1.5% in March, the NAR announced on Tuesday. The data was better than forecasts, as economists expected only a 0.1% rise. February’s print was also revised up to 2.5% from 1.8%. Month-over-month pending home sales rose in the Northeast and South, but declined in the Midwest and West.
For the year, pending home sales declined -1.1% against expectations for a 0.7% increase and following the unrevised -0.8% drop in February. Year-over-year sales increased in the South, but declined in the Northeast, Midwest and West.
“Contract signings rose in March despite higher mortgage rates, pointing to pent-up housing demand,” said NAR Chief Economist Dr. Lawrence Yun. “A greater supply of inventory will help translate that demand into more home sales.”
“Demand sensitivity to mortgage rates is greatest among first-time buyers, particularly younger buyers,” Yun said. “As a result, boosting supply and new-home construction should focus on smaller, more affordable homes.”
“A good number of markets in the South experienced price cuts over the past year but recorded the strongest job growth,” Yun added. “That combination should lead to stronger housing market activity in the South this year.”
Spot gold continued to come off its session low as it attempted to reclaim the $4,800 level in the minutes following the housing data. It last traded at $4,781.31 per ounce for a loss of 0.81% on the day.
Economists pay close attention to pending home sales because the report is a leading indicator of existing home sales, given that contracts are signed a few months before homes are actually sold.
The U.S. housing market has been trying to stabilize after seeing significant weakness over the past two years, as many potential home buyers were priced out of the market due to rising prices and high mortgage rates.
