Rising to the highest level in seven months, pending home sales improved “solidly” in February. Up 3.5 percent for the month, the index is higher than this time last year, led by a surge of sales in the Midwest (despite a dip in the Northeast), according to the National Association of Realtors (NAR).
Although pending home sales have improved year-over-year for the past 18 consecutive months, last month’s reporting had some nervous as the annual gain was the smallest in some time. February reporting may put most at ease.
February made “promising strides”
Dr. Lawrence Yun, NAR chief economist, referred to February data as “promising strides.”
“After some volatility this winter,” notes Dr. Yun, “the latest data is encouraging in that a decent number of buyers signed contracts last month, lured by mortgage rates dipping to their lowest levels in nearly a year1 and a modest, seasonal uptick in inventory.”
Moving forward, Dr. Yun says the key for keeping this momentum and a better spring than last year is “a continuous stream of new listings quickly replacing what’s being scooped up by a growing pool of buyers. Without adequate supply, sales will likely plateau.”
The silver lining of last month’s slump
Although last month’s slump in existing home sales had some worried, Dr. Yun says there is a silver lining – price appreciation lessened to 4.4 percent, which is still above wage growth but certainly more favorable than the 8.1 percent annual increase in January.
“Any further moderation in prices would be a welcome development this spring,” adds Dr. Yun. “Particularly in the West, where it appears a segment of would-be buyers are becoming wary of high asking prices and stiff competition.”
Regional performance varied
As mentioned, this month’s superstar was the Midwest region, which helped the index rise, despite slipping sales in the Northeast:
- Pending sales surged 11.4 percent in the Midwest, and are 2.5 percent above a year ago.
- Pending sales declined 0.2 percent in the Northwest, and are 12.6 percent above a year ago.
- Pending sales increased 2.1 percent in the South, and are 0.4 percent below a year ago.
- Pending sales rose 0.7 percent in the West, and are 6.2 percent above a year ago.