Despite rising mortgage rates, pending home sales jumped 3.4% in March, according to the latest housing report from the National Association of REALTORS® (NAR). Transaction volumes in the Northeast, South and West bore witness to monthly increases, as the Midwest was the only region to have recorded a loss. Year-over-year however, only the Midwest and West have improved in home sales.
NAR expects there to be 4.46 million existing-home sales in 2024, which is a 9% increase from last year at 4.09 million, while also estimating home sale growth of another 13.2% from this year to 2025, by nearly half a million—potentially surging to 5.05 million transactions.
Additionally, housing starts are expected to rise by 1.2% through the remainder of this year, reaching 1.43 million, from 1.413 million. By 2025, that number is expected to increase to 1.5 million—an increase of 4.9%.
“March’s Pending Home Sales Index—at 78.2—marks the best performance in a year, but it still remains in a fairly narrow range over the last 12 months without a measurable breakout,” said NAR Chief Economist Lawrence Yun. “Meaningful gains will only occur with declining mortgage rates and rising inventory.”
And, the demand for homeownership still remains a goal at the forefront for many new families and young adults, although high mortgage rates and home prices have limited purchases this spring for many.
“There is still significant pent-up demand for homeownership across the country,” said Bright MLS Chief Economist Dr. Lisa Sturtevant. “For example, if people in their 30s owned homes at the same rate as they did 20 years ago, there would be about 750,000 more homeowners in the U.S.”
“However,” she continued, “elevated mortgage rates and high home prices have been keeping some buyers on the sidelines this spring. First-time homebuyers are having the hardest time. The number of buyers who are bringing all cash to the transactions has been on the rise. Some of these all-cash buyers are investors, but the majority are repeat homebuyers who are able to roll equity from a home sale into their next purchase. These buyers are much less sensitive to mortgage rates and will be better positioned to remain in the market this spring.”
Although home prices continue to soar, hitting record highs, NAR expects home sales to still slightly improve.
“Job gains, steady mortgage rates and the release of inventory from pent-up home sellers will lead to more sales,” explained Yun. “Given the lingering housing shortage, home prices will march higher, albeit much more slowly than in the past.”
