A gauge of U.S. pending home sales rose less than forecast in March, signaling a lack of available properties is keeping some buyers sidelined even though demand for homes remains strong.
The National Association of Realtors’ index of pending home sales increased 1.9% from the prior month to 111.3, according to data released Thursday. The median estimate in a Bloomberg survey of economists called for a 4.4% gain.
Severe winter weather limited housing activity in February and rising borrowing costs and skyrocketing property values have been pricing some buyers out of the market. Still, mortgage rates remain historically low, which could allow for more contract signings throughout the U.S. in the coming months.
Compared with last March — when pandemic-related lockdowns began — contract signings rose 25.3% on an unadjusted basis, the biggest year-over-year gain since 2010.
“Low inventory has been a consistent problem,” Lawrence Yun, chief economist at the NAR, said in a statement. “With mortgage rates still very close to record lows and a solid job recovery underway, demand will likely remain high.”
All regions except the Midwest saw gains, with sales rising the most in the Northeast.
The Realtors group said it expects existing home sales to rise 10% this year to 6.2 million and prices to climb 9.2% to a median $323,900.
Policy makers at the Federal Reserve said this week they are watching home prices closely.
“There’s clearly strong demand and there’s just not a lot of supply right now, so builders are struggling to keep up,” Fed Chair Jerome Powell said during a press conference Wednesday.
Housing has been a bright spot for the economy throughout the pandemic. U.S. growth accelerated to a 6.4% annualized rate in the first quarter following a softer 4.3% pace in the prior three months, the Commerce Department’s preliminary estimate showed Thursday.