Pending Home Sales Highest in Year

Pending home sales jumped in February to their highest level in nearly a year and second-highest level in more than a decade, the National Association of Realtors reported yesterday.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose by 5.5 percent to 112.3 in February from 106.4 in January. The index is 2.6 percent above a year ago, is the highest since last April (113.6) and the second highest since May 2006 (112.5).

All major regions saw a notable hike in contract activity last month. The Northeast rose by 3.4 percent to 102.1 in February and by 6.6 percent from a year ago. In the Midwest the index jumped by 11.4 percent to 110.8 but fell by 0.6 percent from a year ago. In the South the index rose by 4.3 percent to 127.8 and improved by 4.2 percent from a year ago. The West increased by 3.1 percent in February to 97.5 and by 0.2 percent from a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the positive report bodes well for home sales this spring. “The resurgence in pending sales was likely influenced by unusually mild winter weather, which boosted contract signings in the Midwest. Weather provided less help in the West, where sales are being held back by exceptionally tight inventories.”

NAR Chief Economist Lawrence Yun said February’s “convincing” bump in pending sales is proof that demand is rising with spring on the doorstep.

“Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country,” Yun said. “The stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year.”