Somewhat surprisingly, contract signings for existing US homes managed a gain in March, according to an update on the marquee measure of pending sales released Tuesday.
The 1.5% uptick was the second monthly advance in a row, and it wrong-footed economists who (not irrationally) expected a flat readout for March at best.
Recall that mortgage rates rose nearly 40bps last month as the surge in oil prices pressured 10-year Treasury yields higher.
Another jump in financing costs was just about the last thing America’s beleaguered housing market needed at a time when buyers, sellers and agents alike were all hoping against hope that 2026’s spring buying season was a light at the end of a very long tunnel.
As the figure shows, March’s gain on the NAR’s gauge extends a rebound off what felt like a hopeless nadir in January.
NAR Chief Economist Lawrence Yun said the surprise uptick reflects “pent-up housing demand” and a recovery in inventories.
“Sensitivity to mortgage rates is greatest among first-time buyers, particularly younger buyers,” he added, in the course of suggesting builders “should focus on smaller, more affordable homes.”
NAHB builder sentiment’s mired in a two-year depression, and April’s update was somehow even more abysmal than expected.
Meanwhile, Redfin’s more timely data paints a less encouraging picture of pending sales, even as the figures aren’t apples-to-apples with the NAR series.
Contract signings fell more than 4% from the same period a year ago in the four weeks to April 12, Dana Anderson said late last week. That was the most pronounced drop in more than a year.
Anecdotally, I do know a lot of people, my age and older, who are giving their adult children money to help with the purchase homes. I was at a wedding this past weekend (bride/groom were early 30’s) and many parents were talking about this.
This is something I don’t necessarily agree with because giving money can “rob” adult children of the opportunity for achieving their own success, on their own terms. Giving too much money can absolutely screw up the young adult children (I’ve seen that, too). Plus, “I’m still using it!”
Yeah, I don’t think parents should be doing that. I mean, if your 25-year-old’s scraped up $40k for a down payment and his / her soon-to-be spouse has chipped in another $10k and you wanted to, you know, give ’em $10k on move-in day as a “Congratulations, you deserve this” housewarming gift, that’s one thing. But this trend where parents who aren’t super-rich are forking over entire down payments to their 32-year-old children is sad, and I have to think not great for the children’s pride, even if they happily take the money.
I think a family is like an enterprise. At times, the older members have to dish out a bonus, maybe for a house purchase. The older ones. should have by now, created a surplus of savings for that kind of situation. That is just me, not everyone wants to help their whole family stay in good shape.
DHI new orders +11% YOY with units and price up, unsold invtry -35%
Their average house is $365K and 1957 sf now, less any buydown – ASP has been declining since 2022
DHI’s $/sf was $150 in 2021, $173 now, which is “only” +2.9% annual inflation
$365K implies something like a $90K income, not far off median US HH income appx mid $80Ks
Average customer is 90% LTV, 64% first time, $95K HH income, 47% FHA loan, 40 y/o
I haven’t looked at homebuilders for some time; these metrics were less bad than I’d expected
I’m old enough to have given my daughter and her husband (actually two) money to get into a house four times. And since my sickly SIL hasn’t worked in three years I’ve also coughed up half of his lost pay. I’m getting old enough to die any time so I don’t really care about whether what I have done has been smart. They have both gone through being out of work for 2 and 3 years respectively so it’s not as though they haven’t experienced hardship. Over the last 25 years I also had to take care of my wife through 18 years of Alzheimer’s and 6+ years of being a widower. If you can’t spread some of your investment returns around to family and others in need then why earn it?
I agree, you can’t take it with you.
Mr. Lucky, please don’t die anytime soon. We still need your insights/anecdotes.
By the way, I agree- I’ll absolutely give my money to my 3 kids… just not right now. Now is their time to figure out their own life on their own terms. I absolutely don’t want to sap their drive, or “steal away” any opportunity for them to figure out how capable they are. Desire and fear are incredible drivers.
From personal experience, it was only after I failed (on multiple levels), that I got myself pulled together and made some pretty good strides towards financial independence and I moved up a few rungs on the ladder towards self-actualization. My parents were definitely not funding me during that time period.
Plus, I think your daughter is a decade or two older than my kids.
Finally, and in all seriousness- our government should probably lower the lifetime estate and gift exemptions. Use it or lose it.
🙂
I still have a decade to figure out my plan for what support my kids may get once they fly the coup, but this is a topic I think about often. Right now, my inclination is to set aside a fixed pot of money that can be used for one of four things: education, house down payment, starting a business, or childcare expenses.
I don’t want to sap my kids drive, but I’d also like them to be able to pursue paths without having to make financial considerations the primary driver, especially given how costs have gone up so much and the uncertainty of future employment prospects for young people. We’ll see though. I’ve still got a decade+ to see how things play out (and assuming I can maintain my own nest egg).
Also, Ezra Klein recently had a discussion about how messed up our tax code has gotten, especially as it relates to estate taxes. A bunch of insanely wealthy families got together to lobby the government and tried to find examples of estate taxes forcing people to sell family farms. When they couldn’t actually find anyone, they basically made up an example with a family that wouldn’t have paid any estate taxes anyway. It’s only gotten worse since then.
As someone who pays close to half my income in taxes, it’s infuriating to see people rack up insane fortunes and pay a far lower rate or even nothing at all by virtue of inheritance. I am happy that I make a good living, but it’s BS for salaries to be taxed so aggressively while passive income gets rewarded (and I still have to pay a ton for healthcare to boot).
Oh and don’t get me started on the prop 13 defenders in California who claim Grammy will get kicked out of her million dollar home if she’s forced to pay more than $2,000 a year in property taxes 🙂
Mr. L, I remember reading here and there about your kids’ difficult career period. I’m sorry about it. Do you think it is an “AI” effect or some other “changing economy” thing?
My wife and I bought our first starter home in Pasadena in 1995 for $164,000. It was a 1 bedroom, 1 bathroom California bungalow built on its own lot in 1921. It had a one car garage (presumably for your model T) and measured all of 720 square feet. We used to joke that it was so small you had to step outside just to change your mind, but we loved that place and lived there for nine-years. In the old days in Los Angeles, they used to build “honeymoon cottages” like that three on a lot (usually without garages), or sometimes six on two lots with the homes facing each other and a sort of courtyard in the middle. I don’t claim to know the ins and outs of home construction, but someone should revive that Idea and allow younger buyers to purchase something of their own at a reasonable price again.
Houses are so big now. My first house was a 1200 sf bungalow in Southern Cal.
The problem is that floor area increases faster than perimeter. A square of 1×1 size has area 1 and perimeter 4; a square of 1.5×1.5 size has area 2.25 and perimeter 6. For a 50% increase in perimeter you get 125% increase in area. Most of the expense is the perimeter (building envelope), most of the revenue is the area. So a developer is always incented to build the largest house the lot will accommodate gracefully (or not gracefully), up to some diminishing returns point which is probably in the 2,000s of sf.