March marked the official start of the spring, but it didn’t cause more home buyers to leap into action.
Signed contracts to purchase existing home rose just 0.4 percent in March compared to February, according to a monthly pending home sales index from the National Association of Realtors. February’s reading was revised down.
These contracts are a forward-looking indicator of closed sales in April and May. The index was down 3 percent compared to March 2017, marking the third straight month of annual declines.
“Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory,” said Lawrence Yun, chief economist for the Realtors. “Steady price growth and the swift pace listings are coming off the market are proof that more supply is needed to fully satisfy demand.”
The biggest challenge in today’s housing market continues to be a severe shortage of homes for sale, especially at the lower end of the market, where demand is highest. There were about 9 percent fewer homes on the market in March compared to a year ago, pushing prices up 8 percent, according to Zillow. Homebuilders are also focused on the move-up, rather than entry-level market, as the cost of construction continues to rise.