Pending Home Sales Down, But Not So Much

Pending home sales fell again in February, the National Association of Realtors reported yesterday, amid signs that the worst of the recent slump is easing.

NAR said its Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased by 1.0 percent to 101.9 in February, down from 102.9 in January. Year-over-year contract signings declined by 4.9 percent, marking the 14th straight month of annual decreases.

Regionally, gains in pending home sales in the South and West more than offset declines in the Midwest and Northeast. In the South, pending sales rose by 1.7 percent to 121.8 in February from January but fell by nearly 3 percent from a year ago. In the West, pending sales edged up by 0.5 percent to 87.5 but fell by nearly 10 percent from a year ago.

In the Northeast, pending sales fell by 0.8 percent to 92.1 in February and by 2.6 percent from a year ago. In the Midwest, sales fell by 7.2 percent to 93.2 in February and by 6.1 percent from a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the slide in pending home sales appears to be ending.

“Given the long slide in home sales during most of 2018 and the sharp drop in sales late last year, the first two months of 2019 have marked a bit of a respite,” Vitner said. “The Fed’s more dovish tone on interest rates has likely arrested the slide in home sales but has not yet engendered a recovery.”

NAR Chief Economist Lawrence Yun noted February’s pending home sales decline is coming off a solid gain in the prior month. “In January, pending contracts were up close to 5 percent, so this month’s 1 percent drop is not a significant concern,” he said. “As a whole, these numbers indicate that a cyclical low in sales is in the past but activity is not matching the frenzied pace of last spring.”