Pending Home Sales Decline for Fifth Consecutive Month in March—Down Year-Over-Year

Posted on April 27, 2022

The National Association of Realtors® (NAR) reported on Wednesday (4-27-22) their Pending Homes Sales Index (PHSI), which is based on signed real estate contracts, not actual closings, for existing single-family homes, condominiums, and co-ops. In March, the PHSI declined -1.2% from February to a reading of 103.7. This marks the fifth consecutive month of declines in the PHSI. Year-over-year contract signings have also declined -8.2%.

An index of 100 is equal to the level of contract activity in 2001.

According to the PHSI, month-over-month, only the Northeast saw an increase in contract signings, while the three other major U.S. regions experienced declines in transactions. All four regions reported decreases in year-over-year contract activity.

In remarks prepared for the release of the March PHSI, Lawrence Yun, NAR’s chief economist,

“The falling contract signings are implying that multiple offers will soon dissipate and be replaced by much calmer and normalized market conditions. As it stands, the sudden large gains in mortgage rates have reduced the pool of eligible homebuyers, and that has consequently lowered buying activity. The aspiration to purchase a home remains, but the financial capacity has become a major limiting factor.

Overall existing-home sales this year look to be down 9% from the heated pace of last year. Home prices are in no danger of decline on a nationwide basis, but the price gains will steadily decelerate such that the median home price in 2022 will likely be up 8% from last year.”

Yun also offered his insights, expectations, and forecast:

  • The 30-year fixed mortgage rate to reach 5.3% by the fourth quarter, mortgage rates to average 4.9% in 2022, and to hit 5.4% by 2023.
  • Inflation will average 8.2% in 2022, although it will start to moderate to 5.5% in the second half of this year.
  • As of March 2022, higher mortgage rates and sustained price appreciation has led to a year-over-year increase of 31% in mortgage payments.
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