The U.S. housing market delivered an unexpected signal of resilience in March, as pending home sales rose more than forecast—offering a rare bright spot in an otherwise pressured environment.

Contracts to purchase previously owned homes increased by 1.5%, reaching an index level of 73.7, according to the National Association of Realtors. The gain exceeded economists’ expectations, which had called for a more modest rise of about 0.5%.

At first glance, the increase suggests that buyers are still active, even as affordability challenges continue to dominate the market.

Demand Is Still Alive—Even Under Pressure

The March data highlights an important reality: housing demand has not disappeared.

Despite mortgage rates rising during the month—from roughly 5.98% in late February to around 6.38% by the end of March—buyers continued to sign contracts.

A combination of factors likely drives this resilience. Some buyers moved quickly to secure deals before borrowing costs climbed further, while others represent pent-up demand that has been building over months of limited inventory and delayed purchases.

Regional trends also tell a more nuanced story. Contract signings increased in parts of the Northeast and South, while declining in the Midwest and West—reinforcing the idea that today’s housing market is increasingly fragmented rather than moving in one direction.

The Bigger Picture Remains Mixed

While the monthly gain is encouraging, it does not signal a full recovery.

On a year-over-year basis, pending home sales are still down about 1.1%, indicating that overall activity remains below last year’s levels.

This reflects the broader pressures facing the market. Affordability remains stretched, with higher mortgage rates and elevated home prices continuing to limit how many buyers can participate. First-time buyers, in particular, are feeling the impact, as they are the most sensitive to changes in borrowing costs.

At the same time, inventory remains tight, especially in more affordable price ranges. Without a significant increase in supply, even modest demand can struggle to translate into sustained sales growth.

A Market Influenced by External Forces

The March data also underscores how much the housing market is now being shaped by forces beyond real estate itself.

Rising mortgage rates are being driven in part by global factors, including higher oil prices linked to geopolitical tensions. These dynamics are feeding into inflation concerns, which in turn influence interest rates and borrowing costs.

This means the housing market is no longer responding solely to domestic conditions like inventory and employment. Instead, it is increasingly tied to global economic trends, making it more volatile and harder to predict.

A Disconnect Between Indicators

Another layer of complexity comes from how different housing indicators are moving in opposite directions.

While pending home sales rose in March, existing home sales recently fell to a nine-month low, highlighting a disconnect between contract activity and completed transactions.

This gap reflects timing, as pending sales typically lead closed sales by one to two months. It also reflects uncertainty, as some deals may not make it to closing if financing conditions change or buyers reassess their decisions.