Pending home sales in the U.S. dropped sequentially in March after rising robustly in the prior month. The sales fell 0.8 percent month-on-month, as compared with February’s rise of 5.5 percent and consensus expectations of a decline of 0.1 percent. On a year-on-year basis, the pending home sales rose 0.5 percent, as compared with the 2.4 percent decline in the prior month.
On sequential basis, sales dropped as limited supply was a drag on contract signings. However, despite the decline in sales, the index continues to be at a strong level consistent with continued improvement in existing home sales.
Region wise, sales dropped in all regions except the South that registered a rise of 1.2 percent. Notably, the West recorded one of the biggest drops, as supply and affordability pose as major challenges. Existing home sales recorded a moderate first quarter rise of 1.4 percent, implying broker commissions on property sales that feed into the calculation for residential investment that will likely rise a bit over the quarter, noted Wells Fargo in a research report.
“We expect housing to support U.S. economic growth in the first quarter and look for residential investment to rise at a 10.5 percent annualized rate in Q1”, added Wells Fargo.
Overall, today’s report implies a rebound in the housing market momentum in the first quarter. The data continues to be supportive of a modest recovery in the housing sector for this year, noted Barclays in a research report.
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