Pending Home Sales Hit Seven-Month High

Pending home sales reached their highest level in seven months, the National Association of Realtors reported yesterday.

The NAR Pending Home Sales Index, a forward-looking indicator based on contract signings, rose by 3.5 percent to 109.1 in February from a downwardly revised 105.4 in January and is now 0.7 percent higher than a year ago (108.3). The Index increased year-over-year for the 18th consecutive month, albeit at a smaller pace in February.

All regions except for the Northeast saw an increase in contract activity in February. The Northeast declined by 0.2 percent to 94.0 in February but improved by 12.6 percent from a year ago. In the Midwest the index rose by 11.4 percent to 112.6 in February and by 2.5 percent from a year ago. Pending sales in the South increased by 2.1 percent to 122.4 but were 0.4 percent lower than a year ago. The West rose by 0.7 percent in February to 96.4, but fell by 6.2 percent from a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said continued volatility in the Pending Home Sales Index–the increase came after an equal drop in January–likely reflects milder than usual weather. “While the winter data are notoriously volatile, February’s increase is a good omen for the spring selling season,” he said.

NAR Chief Economist Lawrence Yun said pending sales made “promising strides” in February. “After some volatility this winter, the latest data [are] encouraging in that a decent number of buyers signed contracts last month, lured by mortgage rates dipping to their lowest levels in nearly a year and a modest, seasonal uptick in inventory,” he said. “Looking ahead, the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what’s being scooped up by a growing pool of buyers. Without adequate supply, sales will likely plateau.”