- Akin Oyedele/Business Insider
Pending home sales jumped more than expected, reaching their highest level in almost a year.
Pending home sales increased 1.4% in March, according to the National Association of Realtors (NRA).
This was the second consecutive month that saw an increase, following the previous month’s jump up 3.5%.
Economists were expecting pending home sales to rise 0.5% in March, according to Bloomberg.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 1.4% to 110.5 in March from February’s 109.0. The reading is now at its highest level since May 2015.
“Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March,” Lawrence Yun, NAR chief economist said, adding that March’s pending sales increase suggests a “solid beginning to the spring buying season.”
“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.”
However, Yun also added that the failure to construct more single-family homes in recent years is starting to affect some of the top job producing markets, where supply shortages limit choices for buyers and drive up prices above what most people can afford.
Notably, the housing market is currently facing an undersupply problem that is helping to lift prices beyond the affordable reach of many Americans. Some economists previously noted that this is a particularly big problem for first-time home buyers.