U.S. pending home sales rise in March, existing home sales likely to rise in comings months

U.S. pending home sales rose modestly in the month of March. On a sequential basis, pending home sales rose 0.4 percent, slightly below consensus expectations of a rise of 0.7 percent. The data for February was downwardly revised by three-tenths to 2.8 percent sequentially. On a year-on-year basis, sales activity continues to be lower compared to last year, and is down 4.4 percent.

The consistent rate of home price appreciation, along with lean inventories of existing homes is making affordability an issue in certain pockets of the market. Furthermore, mortgage rates have been rising. Therefore, pending home sales are expected to stay muted in months ahead absent a rise in the inventory of existing homes, said Barclays in a research report.

Pending home sales measure housing contract activity and are based on signed real estate contracts for exiting single-family homes, condos and co-ops. They usually lead existing home sales by a month or two. Therefore, a modest rise in existing home sales is expected in the months ahead, added Barclays.

Region wise, pending home sales rose in the Midwest and South, while they fell in the Northeast and West regions.

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