February Pending Home Sales Fall 10.6%

Pending home sales fell in February, the second straight month monthly decrease, the National Association of Realtors reported.

The Pending Home Sales Index www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, dropped 10.6% to 110.3 in February. Year-over-year, contract signings fell 0.5%.

Each of the four major U.S. regions witnessed month-over-month declines in February, while results were mixed in the four regions year-over-year.

In the Northeast, the index fell by 9.2% to 92.3 in February and fell by 3.9% from a year ago. In the Midwest, the index dropped by 9.5% to 102.4 last month and fell by 6.1% from a year ago.

Pending home sales in the South fell by 13% to 133.2 in February, but improved by 2.9% from a year ago. In the West fell by 7.4% in February to 96.9, but improved by 1.9% from a year ago.

“The demand for a home purchase is widespread, multiple offers are prevalent and days-on-market are swift but contracts are not clicking due to record-low inventory,” said Lawrence Yun, NAR chief economist. “Only the upper-end market is experiencing more activity because of reasonable supply. Demand, interestingly, does not yet appear to be impacted by recent modest rises in mortgage rates.”

The report said nationally, homes priced at above $250,000 have largely been driving home sales for the last several months. However, Yun said even homes priced above $500,000 to less than $1 million are subject to the same low-inventory dilemma.

“Potential buyers may have to enlarge their geographic search areas, given the current tight market,” Yun said. “If there were a larger pool of inventory to select from – ideally a five- or a six-month supply – then more buyers would be able to purchase properties at an affordable price.”