Volume of contract signings down in February
Pending home sales (contract signings) slid slightly in February, according to the National Association of Realtors whose Pending Home Sales Index (PHSI) released today revealed a 0.5 percent drop for the month, but a 9.2 percent increase above February 2011.
Dr. Lawrence Yun, NAR chief economist, said this month represents a continuation of an uneven but higher sales pattern. “The spring home buying season looks bright because of an elevated level of contract offers so far this year,” he said. “If activity is sustained near present levels, existing-home sales will see their best performance in five years. Based on all of the factors in the current market, that’s what we’re expecting with sales rising 7 to 10 percent in 2012.”
Regional pending home sales indices
Regional performance varied with sales falling in all regions except the Midwest which actually experienced an improved month for contract signings. The Midwest also has the largest improvement for the year, followed closely by the Northeast, with the West as the only region with an annual drop.
- In the Northeast, pending home sales fell 0.6 percent in February but are 18.4 percent above February 2011.
- In the South, pending home sales fell 3.0 percent in February but are 7.8 percent above February 2011.
- In the West, pending home sales fell 2.6 percent in February and are 1.8 percent below February 2011.
- In the Midwest, pending home sales rose 6.5 percent in February and are 19.0 percent above February 2011.
Existing home sales, housing challenges
Pending home sales (contracts signed) are used to measure future closings and with a slight dip for the month, the spring could also drop, despite an 8.8 percent increase in existing home sales for February.
NAR members continue to cite challenges, with 31 percent recording contract failures, 33 percent cancellations, and 18 percent experiencing delays, with only 51 percent of contracts settling on time in February. Reasons for failure continues to be appraisals coming in below the negotiated price as well as declined mortgage applications.
“Many buyers are staying in the market after experiencing a contract failure and making an offer on another property, showing their determination to take advantage of the favorable conditions, but the cancellations are contributing to an uneven sales pattern,” Dr. Yun said.