A prospective home buyer is shown at home by a real estate agent in Coral Gables, Florida.
Home buyers signed 3.8% more home purchase contracts in March compared to February. according to the National Home of Sales Index of the National Association of Realtors. That was higher than analysts expected.
Sales were down 1.2% compared to March 2018, the 15th consecutive month of annual declines.
Buyers had additional incentive in March as mortgage rates fell to their lowest levels in over a year. The average interest rate for the popular 30-year fixed-rate mortgage was 5% at the beginning of November, but then declined and dropped to just under 4% in March. This gave buyers added purchasing power and increased confidence in the overall market, where prices were overheating.
"We see a positive consumer sentiment about home purchases as mortgage loans are rising steadily and mortgage rates are extremely cheap," wrote Lawrence Yun, NAR Chief Economist, in a release.
Yun also pointed to the upcoming sales have been unusually fluid in recent months, but predicted that the numbers will rise "more steadily".
Mortgage applications for home ownership have weakened in recent weeks, with mortgage rates now at around a quarter. This is one percentage point higher than in March.
Housing price rises have been declining since last summer, but only after affordability has fallen to the worst level in over a decade. Prices rose 4% nationwide in February, compared to a 4.2% annual increase in January, according to the S & P CoreLogic Case-Shiller home price index.
Regionally, home sales in the northeast fell by 1
"Despite some affordability problems in the West, the numbers suggest that there is a reason for optimism, and stockpiles have also increased, which are excellent conditions for the region," Yun added.
According to the NAR, however, this increase may be more likely to be homes that are more in the market than a major leap in new offerings. Dwindling price increases could help, but only if interest rates remain low.
"The slowdown reflects the wider range of inventory available to shoppers this winter, giving them more room for pricing than in the past," wrote Matthew Speakman, an analyst at Zillow. "Shoppers could lure spring into falling mortgage rates, though interest rates have been low enough that they no longer trigger the kind of intense demand that drives up prices."