Despite rising mortgage rates, Pending home sales increased 3.4% in March, according to the National Association of REALTORS® (NAR)’s latest housing report. Volumes in the Northeast, South, and West increased month-over-month, with the Midwest being the only region to record a loss. However, only the Midwest and West saw home sales improve year over year.
NAR expects existing home sales to reach 4.46 million in 2024, an increase of 9% from last year’s 4.09 million, while an additional 13.2% from this year to 2025, or nearly 500,000 home sales. It is estimated that there is a possibility of growth. The number of transactions he surged to 5.05 million.
Additionally, housing starts are expected to increase 1.2% through the remainder of the year, from 1.413 million to 1.43 million. By 2025, that number is expected to increase to 1.5 million, an increase of 4.9%.
“March’s Home Sales Pending Index (78.2) marked its best performance in a year, but remains within a fairly narrow range over the past 12 months,” said NAR Chief Economist Lawrence Yun. “There are no visible breakouts.” “Only lower mortgage rates and increased inventory will result in meaningful gains.”
And while high mortgage rates and home prices are limiting purchases this spring for many, the demand for homeownership remains a top goal for many new families and young adults.
“There remains significant pent-up demand for homeownership nationally,” said Dr. Lisa Sturtevant, chief economist at Bright MLS. “For example, if people in their 30s owned their homes at the same rate as they did 20 years ago, there would be about 750,000 more homeowners in the United States.”
“However,” she continued, “rising mortgage rates and soaring home prices are putting some buyers on the back burner this spring. First-time homebuyers are having the hardest time. An increasing number of buyers are bringing all cash to the transaction. Some of these all-cash buyers are investors, but most are repeat home buyers who can transfer the equity they earn from a home sale to their next purchase. These buyers are likely to be in a better position to remain in the market this spring as they are less sensitive to mortgage rates.
Although home prices continue to rise and hit record highs, NAR still expects home sales to improve slightly.
“Increased employment, stable mortgage rates, and the release of inventory from stuck home sellers will lead to increased sales,” Yun said. “Given the prolonged housing shortage, house prices are likely to rise, albeit much more slowly than in the past.”
