US pending home sales rise more quickly than expected in March

A leading indicator of existing home sales in the US increased slightly in March, reaching their highest level since May 2015.

The National Association of Realtors´ pending home sales index rose 1.4% to 110.5 in March, versus a 0.5% gain forecast by economists.

Versus a year-ago it was up by 1.4%.

“Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March. This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing and are taking away some of the sting from home prices that are still rising too fast and above wage growth,” NAR chief economist Lawrence Yun said in a statement.

Yun also highlighted how "endless supply shortgaes" were continuing to limit choices for buyers, driving prices beyond what households could comfortably afford.

An "astonishing" 38% increase in home prices in the West over the past three years was a case in point, he said, leading to a drop in pending sales in four out of the last five months.

In March, the PHSI declined by 1.8% in the West but rose in the three other main geographical regions of the country.

"We can't find any consistent evidence of March Easter distortions in these numbers, and the increase in the past two months, putting the index at a 10-month high, is consistent with the rising trend in mortgage applications," Ian Shepherdson, chief US economist at Pantheon Macroeconomics said in a research report sent to clients.