Home contract signings rose more than expected in March as mortgage rates hovered around their lowest point this year.
The Pending Home Sales Index, which tracks contract signings on existing homes, jumped 6.1% from February, according to the National Association of Realtors. It’s the biggest month-over-month increase since late 2023.
March’s index reading was 76.5, down 0.6% from a year earlier. A level of 100 is equal to the contract activity in 2001.
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“Homebuyers are acutely sensitive to even minor fluctuations in mortgage rates,” NAR Chief Economist Lawrence Yun said in a statement.
Contract signings rose in all regions except the Northeast, which saw a 0.5% drop from February and a 3% decline compared to a year earlier. Pending home sales soared 9.8% in the South from a month earlier and gained nearly 5% in the Midwest and the West.
Mortgage rates hit year-to-date lows in March and held largely stable between 6.6% and 6.7%. Inventory levels have also been on the rise, giving would-be homebuyers more choices.
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The uptick in contract activity for previously owned homes mirrors a jump in new home sales. New construction sales climbed 7.4% in March, with the bulk of the activity coming from homes priced between $300,000 and $499,999.
Homes usually go under contract a month or two before they’re sold, and while not all contracts close, pending home sales are typically an early indicator of housing market activity. March’s data covers just before President Trump’s tariff policies kicked off weeks of dramatic stock and bond market swings that sent mortgage rates higher.
“Unfortunately, without significant relief from mortgage rates or an end to the fears of recession, the year over year retreat this March may be a sign of things to come through the peak of the 2025 homebuying season,” Realtor.com Senior Economist Joel Berner said in a statement.
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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