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Homes Under Contract Are Up—Except in One U.S. Region

Home buyers have been out in force this spring, as the number of homes under contract got a boost last month—except in the Western swath of the country, where the cost of buying is intimidatingly high.

March pending home sales, which are purchases that have yet to close, were up 30.1% from February and 2.9% compared with a year earlier, according to the National Association of Realtors® Pending Home Sales Index.That’s looking at the actual numbers, instead of the seasonally adjusted ones that compensate for the different pace of home buying at different times of year.

“Everything points to a very strong spring and summer for real estate,” says realtor.com®’s chief economist Jonathan Smoke, adding that sales typically go up as the weather turns warmer. “We’re benefiting from continued job creation and more people getting married, having kids, getting divorced and planning for retirement. Buying a home is central to all of those life events.”

The West had the fewest properties under contract in March. The region includes astronomically expensive cities like San Francisco, Seattle and Portland, OR. Pending sales were down 5.7% year-over-year in the region, but were still up 18.7% from the previous month, according to the index.

“It’s where supply of homes for sale is tightest both in the existing home market and due to the lack of growth in the new home market,” Smoke says. “Prices continue to shoot up. … [And] it’s particularly challenging for first-time buyers.”

In Salt Lake City, UT, home prices have risen over the last year, says local real estate broker Lori Hendry of Windermere Real Estate. But the number of homes bearing “for sale” signs has not.

The low sales numbers reflect a lack of properties on the market in some parts of the metro area, she says, not a lack of interest: “There’s huge buyer demand.”

Aspiring homeowners are particularly interested in homes under $400,000, she says, and that’s where demand is highest.

The most soon-to-be new homeowners were in the South, which saw a 1.5% annual bump in pending sales and a 44.4% hike over February, according to the index.

The Midwest continued its climb. Pending sales rose 4.5% over last year and 12.3% over February.

The Northeast also experienced a boost in those about to pick up the keys to their new abodes. Annual sales were up a not-too-shabby 18.7%, while they rose 43.4% over February.

“This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing,” NAR’s chief economist, Lawrence Yun, said in a statement. They’re also “taking away some of the sting from home prices that are still rising too fast and above wage growth.”

Both the Northeast and the Midwest had been slower to recover from the depths of the recession,  which contributed to the uptick in those regions, Smoke says. In addition, they are seeing more job, and therefore, population growth fueling housing demand, he says.

This year’s milder winter also played its part, says Maria Brogan, CEO of the Northeast Association of Realtors, which represents 15 small cities and towns in Massachusetts.

“Nobody was going out to view properties and make offers last [March,]” she says. “Everybody hibernated.”

Completed single-family home sales in her region were up 38.6% last month compared to a year earlier. Condo sales rose 9% year-over-year, she says.

“Because of the low inventory [of homes on the market,] if things are priced right they’re getting picked up quickly,” Brogan says. “Sellers are getting higher than asking price because of that.”

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