Still, pending home sales were up 0.8% compared with March 2016.
The month-over-month dip in March was not due to a lack of buyer demand but, rather, low inventory, which resulted in many would-be buyers not being able to sign contracts.
“Home shoppers are coming out in droves this spring and competing with each other for the meager amount of listings in the affordable price range,” says Lawrence Yun, chief economist for NAR, in a statement. “In most areas, the lower the price of a home for sale, the more competition there is for it.”
Yun says low inventory is part of the reason why first-time buyers have yet to make up a larger share of the market this year. He worries that the painfully low supply levels this spring could push home prices up higher, which, in turn, will create more affordability problems.
About 42% of homes in March sold at or above list price – which is the second-highest percentage since NAR began tracking pending home sales in December 2012.
“Sellers are in the driver’s seat this spring, as the intense competition for the few homes for sale is forcing many buyers to be aggressive in their offers,” Yun says. “Buyers are showing resiliency, given the challenging conditions. However, at some point – and the sooner the better – price growth must ease to a healthier rate. Otherwise, sales could slow if affordability conditions worsen.”
Existing-home sales are forecast to reach about 5.64 million this year – an increase of 3.5% from about 5.45 million in 2016, Yun says.
The national median existing-home price this year is expected to increase around 5%.
In 2016, existing sales increased 3.8%, and prices rose 5.1%.