In a positive sign for the housing market, pending home sales increased in March on a monthly basis even though mortgage rates climbed and gas prices soared as a result of the Iran war.
Contract signings rose 1.5% from February but were down 1.1% year over year, according to the National Association of Realtors® (NAR) Pending Home Sales report.
NAR Chief Economist Lawrence Yun pointed out that the pending sales edged up despite higher mortgage rates, reflecting pent-up housing demand.
“A greater supply of inventory will help translate that demand into more home sales,” he said.
Yun added that because first-time buyers are most sensitive to mortgage rate fluctuations, new-home construction should focus on smaller and more affordable starter homes.
At the regional level, pending home sales were up month over month in the Northeast and South, but ticked down in the Midwest and West.
Year-over-year contract signings increased in the South and decreased in the Northeast, Midwest, and West.
“A good number of markets in the South experienced price cuts over the past year but recorded the strongest job growth,” said the chief economist. “That combination should lead to stronger housing market activity in the South this year.”
March saw mortgage rates increase from around 6.11% in the middle of the month to 6.38% by month’s end, largely driven by the ongoing conflict in the Middle East that sent gas prices soaring.
However, Realtor.com® senior economist Anthony Smith notes that despite that upward drift, rates last month were still roughly half a percentage point below the same period in 2025, preserving much of the year-over-year buying power gains that have quietly been accumulating.
On the supply side, conditions continue to improve. Realtor.com March 2026 Housing Trends Report showed pending listings up 3.9% year over year, the third consecutive month of annual gains, while new listings surged 21.2% from February to 439,000, surpassing the typical seasonal jump and offering buyers the freshest inventory to choose from in several years.
Meanwhile, the national median list price fell 2.2% year over year, the fifth consecutive month of annual declines, meaning more buyers are entering spring negotiations from a stronger position than in 2025.
Smith explains that contract signings mark the first formal step in the homebuying process and typically lead existing home sales by one to two months, making them a useful gauge of near-term activity.
March’s pending sales uptick is expected to set up a modest improvement in April and May closings.
Looking ahead, Smith says the spring housing market enters the season with several meaningful advantages compared with last year.
“Inventory has been steadily climbing, median list prices have declined year over year for five consecutive months, and mortgage rates, despite recent volatility, remain lower than at this point in 2025,” says the economist.
However, there is a risk that this progress will get cut short due to the uncertainty around the Iran conflict and choppy rate movements, with borrowing costs already drifting back above 6.3% in the first weeks of April.
Smith says the concern is that spring 2026 could mirror last year’s volatility, where a market that showed early promise was derailed by buyer hesitation.
“Regionally, the South and West are best positioned to absorb contract activity given their relatively ample supply, while persistent inventory shortages in the Northeast and Midwest will continue to constrain movement regardless of rate direction,” says Smith.
It’s important to remember, however, that there are major variances even within each region, creating one of the most fragmented housing markets in years, as highlighted by the recently-launched Realtor.com Market Clock.
