Pending Home Sales up 3rd Straight Month

Pending home sales rose in February, marking the third consecutive monthly increase, the National Association of Realtors reported Wednesday.

The Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, improved by 0.8% to 83.2 in February. Year-over-year, however, pending transactions dropped by 21.1%.

Three U.S. regions posted monthly gains, while the West declined. All four regions saw year-over-year decreases in transactions. In the Northeast, the index rose by 6.5% from last month to 72.5, but fell by 17% from February 2022. The Midwest index improved 0.4% to 84.9 in February, but fell by 16.5% from one year ago.

In the South, the index rose by 0.7% to 99.3 in February, but fell by 21.7% from a year ago. The West index decreased by 2.4% in February to 64.6 and fell by 28.4% from a year ago.

“After nearly a year, the housing sector’s contraction is coming to an end,” said NAR Chief Economist Lawrence Yun. “Existing home sales, pending contracts and new-home construction pending contracts have turned the corner and climbed for the past three months.”

“February’s uptick in pending home sales is just one of the green shoots signaling that the housing market is thawing in time for spring home-buying,” said Ksenia Potapov, Economist with First American Financial Corp., Santa Ana, Calif. “Other leading indicators, including mortgage applications and builder confidence, have also been trending higher.”

Potapov noted low inventory is still a headwind for home sales, making it hard for potential buyers to find something to purchase. “However, potential home buyers are ready to jump in and responsive to lower mortgage rates,” she said. “Mortgage rates have declined in recent weeks and the labor market has remained strong. If these dynamics persist, housing market activity should continue to warm up along with the weather.”