Spring proves to be the hotter season for the housing market as pending home sales rose this March to 1.1 percent compared to February, reports CNBC, while citing the monthly index from the National Association of Realtors.
The news site also notes that based on NAR's report, the pending home sales jumped to 11.1 percent, greater than last year's recorded data, and is actually at its highest level since June, 2013.
Regional March pending homes data are as follows (via CNBC): Northeast sales dropped 1.5 percent from February but 0.6 percent higher than March 2014. Midwest sales decreased by 2.5 percent month-over-month, yet 11.3 percent higher annually. In the South, data showed a hike of 4 percent monthly and 12.4 percent annually, while in the West, sales increased by 1.7 percent from February, as well as yearly, by 15.6 percent.
"Demand appears to be stronger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year. While contract activity being up convincingly compared to a year ago is certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news. It indicates this year's activity is being driven by more long-term homeowners," Lawrence Yun, NAR chief economist, told CNBC.
This recent news is in accordance with the earlier report of NAR on existing home sales. In the report, U.S existing home sales --or those completed transactions from previously owned single-family homes, townhomes, condominiums and co-ops--- rose from February' s data by 6.1 percent in March, which is the highest sales increase since December 2010 (6.2 percent). NAR revealed that the seasonally adjusted rate total existing home sales in March is 5.19 milion, the highest annual rate in 18 Months ---same as in September 2013--- from 4.89 million in February.
Generally, the country's major regions performed well based on their recorded existing home sales percent hike in March compared to February---Northeast (6.9) Midwest (10.1) South (3.8) and West (6.3), notes NAR.
Yun said these data show a good spring selling season start for the housing industry. "After a quiet start to the year, sales activity picked up greatly throughout the country in March. The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years," Yun added, as noted on the NAR report.
With the current mortgage rates still near historic lows, as reported here on Realty Today (citing Freddie Mac survey), many would have been encouraged to buy their homes this spring that created a hike in home sales. But do not stop yet, as a recent article from Los Angeles Times seems to indicate that interest rates may still be on hold till September or even December, due to poor economic showing, as forecasted by economists.
However, the steady rise in home prices based from the Case-Shiller Index, should also make us vigilant of the changing times, especially for renters who want to own their first homes. With the recent NAR report, it would even make the competition stiffer.
"This in turn has pushed home prices to unhealthy levels-nearly four or more times above the pace of wage growth in some parts of the country," Yun told CNBC.
With this, builders are now encouraged to respond to this increasing demand by building new homes, lowering the competition, and slowing down home appreciation , hopefully, to a healthier rate.
