Pending home sales in the United States, which are counted based on contract signings, jumped in March despite 7% mortgage rates, according to a new report.
Pending home sales increased 3.4% in March, marking the best performance of home sales across the country "in a year," the National Association of Realtors reported Thursday. The pending home sales last month were well over the 0.3% decline forecasted by economists.
Broken into regions, pending home sales grew the most in the South, with a 7.0% increase in March. This was followed closely by the West, with 6.8%, and the Northeast, 2.7%. Only the Midwest saw a decline with pending sales in March falling by 4.3%.
Despite the recent gain, pending home sales are still "in a fairly narrow range over the last 12 months without a measurable breakout," NAR's chief economist, Lawrence Yun, said in the report.
"March's Pending Home Sales Index - at 78.2 - marks the best performance in a year, but it still remains in a fairly narrow range over the last 12 months without a measurable breakout. Meaningful gains will only occur with declining mortgage rates and rising inventory," he said.
US Housing Market
The gain in March comes even as mortgage rates remain elevated. In the week ending April 25, mortgage rates for the 30-year fixed loan rose to 7.17% from the previous week's 7.10%. The rates for the 15-year fixed mortgage also rose to 6.44% from last week's 6.39%, according to Freddie Mac's Primary Mortgage Market Survey.
It also comes even as housing affordability worsens. The median US home price was $430,700 last month, a significant increase from $406,500 in February, per data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Furthermore, the housing market is still facing a shortage in supply, with one of the causes being homeowners, especially baby boomers, choosing not to sell because they want to hold on to their low mortgage rate. This boxes out millennials, especially those with children, from the housing market.
READ MORE: Over 70% of Baby Boomers Have No Plans of Selling Their Homes Anytime Soon: Redfin
