What the March pending home sales data shows
Pending home sales jumped 6.1% in March amid a slight retreat in mortgage rates from the first two months of 2025. Though the improvement from February is significant, pending home sales still trail last March by 0.6%. Currently, buyers are still afflicted with mortgage rates in the high-6% range and consumer confidence is shaken by the trade war that’s roiling markets and leading would-be homebuyers to fear for their jobs. Though the employment numbers in March did not show much cause for concern, American consumers are closely attuned to the grim economic news and water cooler chat around them, which may be affecting their decisions about when or if to buy a home.
New home sales, which are also based on contract signings, had a surprisingly strong month in March, spurred on by the availability of low-cost new inventory. In the existing home segment, though, the high end of the market has been outperforming more affordable homes. First-time homebuyers are in a particularly difficult position since they do not have equity from a previous home that they can use as a down payment, meaning they are forced to finance more of a home purchase at the current high rates. The ability to afford a home is what has kept buyers on the sideline, leading to the slowdown in sales for lower-priced existing homes.
Regionally, the Northeast, which has the most struggles with affordable housing, saw a month over month decline (-0.5%) in pending home sales while the South (+9.8%), Midwest (+4.9%), and West (+4.8%) posted gains against February. On a year over year basis, though, contract signings only grew in the Midwest (+1.4%) while falling in the Northeast (-3.0%), West (-2.0%), and South (-0.4%).
What this means for buyers, sellers, and the housing market
Pending home sales, or contract signings, measure the first formal step in the home sale transaction, namely, the point when a buyer and seller have agreed on the price and terms. Pending home sales tend to lead existing home sales by roughly one-to-two months and are a good indicator of market conditions. Unfortunately, without significant relief from mortgage rates or an end to the fears of recession, the year over year retreat this March may be a sign of things to come through the peak of the 2025 homebuying season.