The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts, increased 3.4% in March to 97.4 from an upwardly revised February level of 94.2. The PHSI monthly increase reported by the National Association of Realtors was the first since June of 2013, although it remains 7.9% below the level of 105.7 last March.
The March PHSI increased in the West, South and Northeast by 5.7%, 5.6% and 1.4% respectively, but fell slightly in the Midwest. Year-over-year, all of the regions were down, ranging from decreases of 11.1% and 10.1% in the West and Midwest to decreases of 5.9% and 5.3% in the Northeast and South.
Last week, Census reported a 14.5% decrease in March new home sales. Extreme weather was a factor in decreased new and existing home sales at the beginning of the year. The March increase in the PHSI suggests that the existing home market will move forward throughout the spring. The growth in household formations and strong pent-up demand will maintain that momentum throughout this year.