After months of stagnant activity, pending home sales rose in March, marking the first gain in the past nine months, according to the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 3.4% to 97.4 from an upwardly revised 94.2 in February, but is 7.9% below March 2013 when it was 105.7.
“After a dismal winter, more buyers got an opportunity to look at homes last month and are beginning to make contract offers,” said Lawrence Yun, NAR chief economist. “Sales activity is expected to steadily pick up as more inventory reaches the market, and from ongoing job creation in the economy.”
The PHSI in the Northeast increased 1.4% to 78.8 in March, but is 5.9% below a year ago. In the Midwest the index slipped 0.8% to 94.5 in March, and is 10.1% below March 2013. Pending home sales in the South rose 5.6% to an index of 112.7 in March, but are 5.3% below a year ago. The index in the West increased 5.7% in March to 91% but is 11.1% below March 2013.
Although home sales are expected to trend up over the course of the year and into 2015, this year began on a weak note and total sales are unlikely to match the 2013 level, said NAR. Existing-home sales are expected to total just over 4.9 million this year, below the nearly 5.1 million in 2013. However, with ongoing inventory shortages in much of the U.S., the national median existing-home price is expected to grow between 6% and 7% in 2014.
This follows a report last week showing sales of new single family homes fell in March to its lowest level since July while existing-home sales fell to their lowest level in more than 18 months during March.
Meantime, a report released late last week show U.S. consumer confidence increased this month to a nine-month high, according to the Thomson Reuters/University of Michigan Index of Consumer Sentiment.
The 84.1 reading beat many analyst expectations and is higher than the preliminary reading of 82.6 released earlier.
"Perhaps the more important question is whether consumer confidence will show greater resistance to the backslides that have repeatedly occurred in the past few years," said Richard Curtin, survey director. "Resilience is dependent on positive long term economic expectations. While near term expectations have improved substantially, longer term expectations for personal finances as well as the overall economy have not improved as much."
The survey also showed consumers' assessment of current conditions rose from 95.7 to 98.7 while consumers' outlook improved from 70 to 74.7 in April.
“Consumer confidence is on the rise, less than five points below the pre-recession average yet the economy has hardly made a similarly sized rebound,” said Lindsey Piegza, chief economist at the investment firm Sterne Agee. “Perhaps consumers are no longer using pre-recessionary times as a comparison but rather a new, lowered bar of expectations, accepting a new normal. On the other hand, rising equity and home prices, coupled with the return of warmer spring weather has boosted consumers' spirits and expectations of further economic improvement.”