The number of residential properties going under contract in the United States saw a modest bump in March.
Pending home sales rose 1.5% from February, defying the headwinds of elevated mortgage rates, according to a report released Tuesday by the National Association of Realtors (NAR).
While the monthly gain underscores the resilience of prospective homebuyers and a persistent backlog of demand, the broader market remains constrained. An ongoing lack of affordable housing inventory contributed to a 1.1% decline in pending sales compared to March of last year, according to NAR data.
“Contract signings rose in March despite higher mortgage rates, pointing to pent-up housing demand,” said NAR Chief Economist Lawrence Yun in the organization’s press release. However, Yun noted that translating this demand into finalized closed sales will require a greater supply of housing inventory.
Reams of research and scores of politicians and think tanks from across the political spectrum align on the understanding that America is facing a housing shortage. For example, a recent report from the Federal Reserve Bank of St. Louis found that there has been a national housing shortfall of 3 million to 5 million units since the 2008 financial crisis.
First-time and younger buyers remain especially sensitive to high borrowing costs and have contributed to the annual decline in pending home sales. To sustain market momentum and bring these buyers to the closing table, Yun emphasized that builders and the broader real estate industry should shift focus toward boosting construction of smaller, more moderately priced homes.
The national figures also mask a highly uneven recovery across different regions of the country. The Northeast and the South drove the monthly national gains, posting month-over-month pending sales increases of 4.4% and 3.9%, respectively, according to NAR’s regional breakdown. Conversely, contract signings declined by 1.3% in the Midwest and 2.6% in the West during the same period.
Looking at year-over-year performance, the South was the only region to post positive growth, registering a 2.3% increase in pending transactions. Yun attributed this regional strength to a potent combination of strong job growth and a notable number of Southern markets that experienced price cuts over the past year. The Northeast, Midwest and West all recorded annual declines ranging from 1.7% to 6.5%, the NAR report stated.
At the metropolitan level, several individual markets departed from the slight national year-over-year drop. Citing data from Realtor.com, NAR’s report highlighted Kansas City as the top performing large metro area, boasting a 14.9% annual rise in pending sales.
Other markets experiencing significant annual growth included Milwaukee, with a 13.5% jump, while Sun Belt destinations like Austin, Texas (12.8%) and Phoenix (12.1%) also posted double-digit gains.
In NAR’s analysis, a sale is listed as pending when the contract has been signed but the transaction has not closed. These sales are typically finalized within one to two months of signing, though the group noted that variations can occur due to mortgage financing hurdles, appraisal discrepancies or home inspection problems.
