Contract signings for previously owned homes surged last month as rates retreated from the first two months of 2025—buyers appear ready to jump, but experts say the rise in rates and tariff uncertainty this month may not allow for the sustained comeback that consumers seem to be ready for.
U.S. pending home sales increased a notable 6.1% in March—the greatest month-to-month increase since December 2023, and up from February’s modest 2% increase—according to the latest Pending Home Sales Index (PHSI) from the National Association of REALTORS® (NAR) released Wednesday.
NAR’s PHSI index is a forward-looking indicator of home sales in the U.S. based on contract signings. Year-over-year, pending transactions lessened by 0.6%.
“Homebuyers are acutely sensitive to even minor fluctuations in mortgage rates,” said NAR Chief Economist Lawrence Yun. “While contract signings are not a guarantee of eventual closings, the solid rise in pending home sales implies a sizable build-up of potential homebuyers, fueled by ongoing job growth.”
Mortgage rates fell by around 20 to 30 basis points in March from the first two months of this year. The average mortgage rate was 6.65% in March, down from a 6.96% average in January, and down from a 6.84% average in February. That trend didn’t last long however, as rates nearly reached 7% again by month’s end.
“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,” said Realtor.com® Senior Economist Joel Berner. “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.”
Looking at the regional breakdown, the March NAR report showed the Northeast experienced month-over-month losses in transactions, while the Midwest, South and West saw gains, which were most substantial in the South. Year-over-year, contract signings grew in the Midwest but fell in the Northeast, South and West—with the Northeast undergoing the greatest decrease.
“Consumers should note that the spring home-buying season typically brings in a surge of homebuyers and sellers compared to the winter months,” added Yun. “In March, signed contracts surged 34.1% from February based on non-seasonally adjusted raw data, reflecting a pattern consistent with previous years. In addition, inventory levels rose by 8.1% in March from the prior month, indicating a more dynamic housing-market environment.”
But while contract signings, which tend to lead existing-home sales by roughly one to two months, are a measure of the first formal step in the home sale transaction, and thereby a good indicator or market conditions, Berner warns the positive signals may be short-lived.
“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 home-buying season.”
To read the full report, click here.
