US pending home sales drop less than expected in March

US pending home sales fell less than expected in March, according to data from the National Association of Realtors.

The NAR's monthly index fell 0.8% to 111.4 from 112.3 in February. Economists had been expecting a drop of 1%.

Despite last month's decline, the index is still 0.8% higher than a year ago.

The NAR's chief economist, Lawrence Yun, said: "Home shoppers are coming out in droves this spring and competing with each other for the meagre amount of listings in the affordable price range.

"In most areas, the lower the price of a home for sale, the more competition there is for it. That's the reason why first-time buyers have yet to make up a larger share of the market this year, despite there being more sales overall."

The pending home sales index in the Northeast was down 2.9% to 99.1 in March, but is still 1.8% above a year ago while the index in the Midwest fell 1.2% to 109.6 and is now 2.4% lower than last March.

Pending home sales in the South rose 1.2% to 129.4 and are now 3.9% higher than March last year, while in the West, the index was off 2.9% to 94.5 and is now 2.7% lower than last year.

Pantheon Macroeconomics said: "After the 5.5% jump in February, when the weather was much less cold than normal, a hefty March drop would have been no surprise, given the severe mid-month weather. In that light, the 0.8% decline is not a bad result. But we don't expect sales to rise much, if at all, over the next few months.

"The pending sales index tends to lag mortgage applications by about three months, and the recent trend has been flat, more or less. If housing is going to make a significant contribution to growth this year, mortgage demand will have to rise markedly over the next few months. We’re hopeful, given strong employment gains and easing lending standards, but that's not the same as being confident."