The rate of pending home sales slowed in March, slipping 1.2 percent from February and 6 percent compared to March 2005, the National Association of Realtors reported today.
The association’s Pending Home Sales Index fell for the third consecutive month.
Regionally, the index in the Northeast rose 5.2 percent in March to 112.9 but was 1.1 percent below March 2005. In the West, the index increased 0.7 percent in March to 111 but was 13.3 percent below a year ago. The index in the South eased 1.2 percent to 127.9 in March and was 1.6 percent lower than March 2005. The index in the Midwest fell 7.4 percent to 106.1 in March and was 9.3 percent below a year ago.
The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed; pending sales typically are finalized within a month or two of signing, the trade group reported. An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales.
The index is based on a national sample – typically representing about 20 percent of transactions for existing-home sales. The level of monthly sales-contract activity from 2001 through 2004 closely parallels the level of closed existing-home sales in the following two months, the association reported.
David Lereah, NAR’s chief economist, said in a statement, “Home sales rebounded from the slide that started last fall, but the pending sales data is showing a dampening effect from rising mortgage interest rates that have been trending up since January. This means a modest slowing can be expected in the sales pace in the months ahead, although the market will hold at historically strong levels.”