U.S. Pending Home Sales Show Unexpected Increase Amidst Rising Mortgage Rates

In March 2026, contracts to purchase previously owned U.S. homes rose unexpectedly by 1.5%, reaching a Pending Home Sales Index of 73.7, according to the National Association of Realtors (NAR). This increase marks the second consecutive month of growth, following a revised 2.5% gain in February. However, the year-on-year comparison remains negative, with a 1.1% decline from March 2025, reflecting ongoing challenges in the housing market.

U.S. Pending Home Sales Up for Second Consecutive Month in March

The increase in pending home sales was primarily driven by gains in the Northeast and South regions. The Northeast experienced a 4.4% rise, while the South saw a 3.9% increase. In contrast, the West and Midwest regions reported declines of 2.6% and 1.3%, respectively. These regional disparities highlight a mixed performance across the country, with the Northeast's rebound suggesting a corrective trend after previous declines, potentially influenced by weather conditions.

U.S. March Pending Home Sales

Despite the positive monthly change, the housing market continues to grapple with high mortgage rates, which averaged 6.38% at the end of March, up from 5.98% in February. These rates are closely tied to U.S. Treasury yields, which have risen amid inflation concerns exacerbated by geopolitical tensions, particularly the U.S.-Israel war. Lawrence Yun, the NAR's chief economist, noted that first-time buyers, especially younger individuals, are particularly sensitive to these rising rates, emphasizing the need for increased supply and affordable housing options.

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The ongoing challenges in housing affordability are becoming increasingly significant as the November midterm elections approach. The NAR reported that existing home sales fell to a nine-month low in March, indicating a potential slowdown in market activity. Additionally, homebuilder sentiment has dropped to a seven-month low, with rising energy costs contributing to the overall increase in residential construction expenses.

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The NAR's data indicates that while there is a slight uptick in pending home sales, the overall trend remains concerning. The organization has called for a focus on boosting supply, particularly for smaller, more affordable homes, to better serve first-time buyers and address the affordability crisis.

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While the pending home sales index shows a positive trend, it contrasts with the decline in existing home sales, suggesting a complex and potentially unstable market environment. The year-on-year decline in pending home sales raises questions about the sustainability of this recent increase, and further data will be needed to clarify the overall trajectory of the housing market.

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“Demand sensitivity to mortgage rates is greatest among first-time buyers, particularly younger buyers,” — Lawrence Yun, Chief Economist, National Association of Realtors.

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“energy costs make up approximately 4% of residential construction material input and service costs.” — National Association of Realtors Report.

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