The National Association of Realtors (NAR) recently reported a significant increase in pending home sales for March, marking the largest month-over-month gain since December 2023. This uptick suggests a potential increase in homebuyer activity, although year-over-year figures show a slight decline.

Regional Variances in Contract Signings

The March data revealed diverse trends across different regions of the United States. While the Northeast experienced a decrease in pending home sale transactions compared to February, the Midwest, South, and West all saw increases. Notably, the South recorded the most substantial month-over-month growth. When comparing March 2025 to March 2024, the Midwest was the only region to register an increase in contract signings. The Northeast, South, and West all experienced year-over-year declines, with the Northeast showing the largest decrease.

Impact of Mortgage Rate Fluctuations

According to NAR's chief economist, Lawrence Yun, homebuyers are highly responsive to even minor changes in mortgage rates. In March, average mortgage rates fell by approximately 20 to 30 basis points compared to the averages in January and February. This decrease likely played a role in the increased pending home sales. Yun noted that while pending sales don't guarantee finalized transactions, the significant rise indicates a growing pool of potential homebuyers, supported by continued job growth.

Seasonal Trends and Inventory Growth

Yun also highlighted the typical surge in homebuying activity during the spring season compared to the winter months. Non-seasonally adjusted raw data showed a substantial 34.1% increase in signed contracts from February to March, aligning with historical patterns. Furthermore, inventory levels saw an 8.1% increase in March compared to the previous month, suggesting a more active and dynamic housing market environment with more choices available for buyers.

Cautious Optimism Amidst Uncertainty

While the month-over-month increase in pending home sales and rising inventory offer a positive outlook, experts advise cautious optimism. According to First American's deputy chief economist, Odeta Kushi, the recent rise in mortgage rates and ongoing economic uncertainty could potentially moderate this positive momentum despite increased buyer interest reflected in rising purchase mortgage applications.

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