A gauge of U.S. pending home sales rose less than forecast in March, signaling a lack of available properties is keeping some buyers sidelined even though demand for homes remains strong.
The National Association of Realtors' index of pending home sales increased 1.9% from the month before to 111.3, according to data released Thursday. The median estimate in a Bloomberg survey of economists called for a 4.4% gain.
Severe winter weather limited housing activity in February and skyrocketing property values have been pricing some buyers out of the market. Still, mortgage rates remain historically low, which could allow for more contract signings throughout the U.S. in the coming months.
Compared with last March -- when pandemic-related lockdowns began -- contract signings rose 25.3% on an unadjusted basis, the biggest year-over-year gain since 2010.
"Low inventory has been a consistent problem," Lawrence Yun, chief economist at the association, said in a statement. "With mortgage rates still very close to record lows and a solid job recovery underway, demand will likely remain high."
All regions except the Midwest saw gains, with sales rising the most in the Northeast. The Realtors group said it expects existing home sales to rise 10% this year to 6.2 million and prices to climb 9.2% to a median $323,900.
Policymakers at the Federal Reserve said this week they are watching home prices closely.
"There's clearly strong demand and there's just not a lot of supply right now, so builders are struggling to keep up," Fed Chair Jerome Powell said during a Wednesday press conference.
Housing has been a bright spot for the economy throughout the pandemic. U.S. growth accelerated to a 6.4% annualized rate in the first quarter following a softer 4.3% pace in the prior three months, the Commerce Department's preliminary estimate showed Thursday.
After three weeks of declines, fixed mortgage rates moved slightly higher this week. According to data released Thursday by Freddie Mac, the 30-year fixed-rate average edged up to 2.98%.
It was 2.97% a week ago and 3.23% a year ago.
Freddie Mac, the federally chartered mortgage investor, aggregates rates from around 80 lenders across the country to come up with weekly national averages. It uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to every borrower.
The survey is based on home purchase mortgages, which means rates for refinances may be higher. The price adjustment for refinance transactions that went into effect in December is adding to the cost. The adjustment, which applies to all Fannie Mae and Freddie Mac refinances, is 0.5% of the loan amount. That works out to $1,500 on a $300,000 loan.
The 15-year fixed-rate average rose to 2.31%. It was 2.29% a week ago and 2.77% a year ago. The five-year adjustable rate average fell to 2.64%. It was 2.83% a week ago and 3.14% a year ago.
"In what was a relatively unremarkable week for mortgage rates, the modest movement was partially driven by discussions about a proposed increase in capital gains tax rates -- which placed downward pressure on bond yields and thus rates - and anticipation of a key announcement by the Federal Reserve," Zillow economist Matthew Speakman said.
The Federal Reserve left its benchmark interest rate unchanged following a meeting this week. The Fed also said it has no plans at this time to reduce its bond-buying program. For more than a year now, the central bank has been buying at least $120 billion in Treasurys and mortgage-backed securities each month.
Powell, who called the economic recovery "uneven and far from complete," said it is premature to discuss reducing its bond-buying program or lifting its benchmark rate.
Information for this article was contributed by Olivia Rockeman of Bloomberg News (TNS) and by Kathy Orton of The Washington Post.