Economic Report: Pending-home sales crawl higher as inventory shortage turns urgent

The numbers: The pending-home sales index from the National Association of Realtors crept up 0.4% to 107.6 in March from a downwardly revised February reading.

What happened: The index of home-contract signings rose for the second straight month but remained below year-ago levels for the third month in a row. Economists had forecast a 1% increase in March.

Pending sales in the Northeast tumbled 5.6% in March, while those in the West declined 1.1%. In the Midwest, pending sales rose 2.4% and in the South they were up 2.5%.

Read: Mortgage rates surge to highest since 2013

The big picture: NAR’s index, which tracks real-estate transactions in which a contract has been signed but the transaction hasn’t closed, helps foreshadow sales of previously owned homes. The preview is telling the same story as the main event: not enough supply to meet demand.

In a release, NAR Chief Economist Lawrence Yun called it “an absolute necessity for there to be a large increase in new and existing homes available for sale in coming months.” Yun forecasts flat sales for the full year in 2018, but sees prices up 4.4%.

For now, homes are flying off the market even as prices surge higher. Homes sold in March were typically on the market for just 30 days, NAR said earlier in April. But the group worries about dwindling affordability, especially as mortgage rates rise.

Read: Existing-home sales rise in March even as supply crunch worsens – Top Stories

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