Pending sales of existing US homes in March reached their highest levels in a year in spite of persistently high borrowing costs and a low supply.

An index of contract signings from the National Association of Realtors climbed 3.4% to 78.2 last month, the highest since February 2023. The median estimate of economists surveyed by Bloomberg called for 0.4% growth.

The gains were led by monthly gains at or near 7% in the South and  West, and, to a lesser extent, the Northeast. The Midwest was the only region where pending sales fell.

While the pending-sales index reached a high point, “it still remains in a fairly narrow range over the last 12 months without a measurable breakout,” NAR Chief Economist Lawrence Yun said in a statement. “Meaningful gains will only occur with declining mortgage rates and rising inventory.”

Sales of previously-owned homes have lagged new-home sales recently, as the nation’s home builders bought down customers’ interest rates or offered other sweeteners to complete deals. The supply in the home resale market, meantime, is well below prepandemic levels.

Many in the existing-home industry are eager for the Federal Reserve to trim interest rates, which Yun last week blamed for causing the market to remain “stuck.” The contract rate on a 30-year fixed mortgage rose to 7.24% in the week ended April 19, its highest level in five months, Mortgage Bankers Association data show.

The pending-sales report tends to be a leading indicator of sales of previously owned homes, because houses typically go under contract a month or two before they’re sold.

NAR sees median home prices rising 1.8% both this year and next, climbing to a record $396,800 in 2024 and $403,800 in 2025. Prices of new houses may dip slightly to $426,100 this year, NAR predicts, because developers are building smaller — thus less costly — homes. But they’re seen snapping back up next year.

“Job gains, steady mortgage rates and the release of inventory from pent-up home sellers will lead to more sales,” Yun said. “Given the lingering housing shortage, home prices will march higher, albeit much more slowly than in the past.”