Pending home sales in the U.S. edged higher in March 2026, signaling underlying demand resilience even as elevated borrowing costs continue to weigh on the housing market.
A new report from the National Association of Realtors showed that contract signings–an early indicator of completed transactions–rose 1.5% from February. Compared with a year earlier, however, activity slipped 1.1%, underscoring the uneven recovery in residential real estate.
The data reflects a market caught between persistent affordability pressures and a pool of sidelined buyers waiting for improved conditions. Gains were concentrated in the Northeast and South, while the Midwest and West posted monthly declines, highlighting a widening regional divergence.
“The increase in contract activity points to pent-up demand that continues to build despite higher mortgage rates,” said Lawrence Yun, chief economist at the Realtors group. He added that a meaningful increase in housing supply will be critical to converting that demand into closed sales.
The South remains the standout performer. Pending transactions in the region climbed 3.9% from the prior month and were up 2.3% from a year earlier–the only region to post an annual gain. Analysts point to a combination of stronger job growth and selective price corrections across Southern markets as key drivers supporting buyer activity.
By contrast, the Northeast recorded the sharpest annual decline, with contract signings down 6.5% from a year earlier despite a 4.4% monthly rebound. The Midwest and West also continued to lag, reflecting ongoing affordability challenges and tighter inventory conditions.
Economists note that first-time buyers–particularly younger households–remain highly sensitive to mortgage rates, which have hovered near multi-year highs. That dynamic is reinforcing calls for increased construction of smaller, more affordable homes to unlock demand at the entry level.
At the metro level, momentum is shifting toward a mix of Sun Belt and Midwest markets. Cities including Kansas City, Milwaukee and Austin posted double-digit gains in pending sales from a year earlier, alongside strong showings in Phoenix, Raleigh and Dallas-Fort Worth. The breadth of gains suggests that affordability-adjusted markets with solid employment growth are beginning to attract renewed buyer interest.
While March’s uptick offers a tentative sign of stabilization, housing economists caution that sustained recovery will depend heavily on inventory expansion and any easing in financing costs. Until then, the market is likely to remain constrained–supported by demand, but limited by supply.
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