Pending home sales in the US fell by 5.2 per cent in March, according to the monthly index released by the National Association of Realtors (NAR) on Thursday.

Sales fell for the first time since November 2022. At the time, buyers had pulled back sharply as mortgage rates exceeded 7 per cent.

The drop in sales in March far exceeded Wall Street's expectations. Economists surveyed by the Wall Street Journal expected pending home sales to increase by 0.5 per cent.

Pending home sales reflect transactions for which contracts for the sale of existing homes have been signed, but the sale has not yet been completed. Economists see this as an indicator of the direction of existing home sales in subsequent months.

Compared to a year earlier, the number of transactions fell by 23.2%.

On a monthly basis, only pending home sales in the southern United States rose by 0.2 per cent.

The National Association of Realtors said a third of home listings saw multiple bids and 28 per cent of sales were above the list price. Realtors also expect 30-year mortgage rates to fall to 6 per cent this year and 5.6 per cent in 2024.

Buyers, already sensitive to mortgage rates, are being hurt even more by the underlying structural problem of low inventory. Some are turning to new homes, boosting sales for builders. However, Vanguard believes that expensive homes and high mortgage rates will drive home prices down this year, by as much as 5 per cent year-on-year.

What are the realtors saying?" NAR chief economist Lawrence Yun said, "The lack of housing inventory is a major constraint on rising sales." The limited housing supply is simply not enough to meet the nation's demand."

Yun expects existing home sales to fall 9.3 per cent year-on-year to 4.56 million units in 2023.

Sales will then pick up, rising 15.4 per cent to 5.26 million, he added.