According to the National Association of Realtors, pending home sales in March increased almost everywhere in the country. The West was the only area that did not see increases in pending home sales last month. It climbed 1.4 percent from February to March, and was also 1.4 percent above March 2015.
“Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March,” says Lawrence Yun, NAR chief economist in an article by Florida Realtors. “This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing, and are taking away some of the sting from home prices that are still rising too fast and above wage growth.”
What affected pending home sales in March?
The fact that interest rates are low creates favorable borrowing costs. These low costs, accompanied by a strong and healthy labor market, support home sales, meaning more Americans purchase homes. However, according to Yun, there has been a failure to create enough single-family homes. This lack of construction is not keeping up with the number of home buyers looking. Then, demand actually weakens because prices are driven too high up.
“Demand is starting to weaken in some areas, particularly in the West, where the median home price has risen an astonishing 38 percent in the past three years,” says Yun. “As a result, pending sales in the region have now declined in four of the last five months and are lower than one year ago for the third month in a row. Closed sales in the region in March were also below last year’s pace.”
In the South, pending home sales rose 3.0 percent, but are still 0.6 percent below March 2015.
Increases in pending home sales indicate a healthy real estate market across the country, including Florida. Looking to purchase a home yourself in Miami? We have many amazing properties here at RE/MAX Paradise!