Spring is bringing more U.S. home buyers into the market. Signed contracts to buy existing homes rose 1.1 percent in March from an upwardly revised February reading, according to a monthly index from the National Association of Realtors.
So-called pending home sales are now 11.1 percent higher than they were one year ago and are running at the highest level since June, 2013.
"Demand appears to be stronger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year," said Lawrence Yun, chief economist for the Realtors. "While contract activity being up convincingly compared to a year ago is certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news. It indicates this year's activity is being driven by more long-term homeowners."
The average contract interest rate on the popular 30 year fixed mortgage has been sitting at or below the 4 percent since the beginning of the year, giving home buyers added purchasing power. Mortgage purchase applications did stall last week, but are distinctly higher than they were a month ago.
The increase last month put contract signings, which usually turn into sales after a month or two, at their highest level since June 2013.
The bigger issue for housing now is fast rising home prices, which are giving some potential buyers sticker shock. Tight supply of homes for sale, amid strong demand, is accelerating price gains again, after the increases moderated throughout much of last year. Homes in March sold at a faster rate than any month since last summer, according to the Realtors, indicating competition is heating up.
"This in turn has pushed home prices to unhealthy levels—nearly four or more times above the pace of wage growth in some parts of the country," added Yun.
Pending home sales in the Northeast fell 1.5 percent month-to-month, and are 0.6 percent above a year ago. In the Midwest, sales fell 2.5 percent monthly, and are 11.3 percent higher year-over-year. Sales increased in the South by 4 percent monthly and 12.4 percent annually, and in the West they rose 1.7 monthly and 15.6 percent annually.
--Reuters contributed to this report.