Every region in the U.S. except the Northeast saw pending home sales go up last month, led by “a sizeable increase” in the Midwest, according to the NAR.
The Pending Home Sales Index, which measures pending sales based on contract activity, rose 3.5% to 109.1 last month from a downwardly revised January level of 105.4. The index is currently sitting 0.7% above February of 2015, and has not increased year over year for 18 straight months. However, January’s increase was the smallest.
“After some volatility this winter, 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,” said Lawrence Yun, NAR chief economist. “Looking ahead, the key for sustained momentum and more sales than last spring 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.”
Yun said one good thing about last month’s slump in existing home sales was that price appreciation slowed to 4.4% -- still above wage growth, according to the NAR, but better than January’s 8.1% increase.
“Any further moderation in prices would be a welcome development this spring," Yun said. “Particularly in the West, where it appears a segment of would-be buyers are becoming wary of high asking prices and stiff competition.”
Existing home sales are predicted to be around 5.38 million for the year, according to the NAR. That’s a 2.4% increase from 2015. Meanwhile, the national median existing home price is expected to rise between 4% and 5% this year.
Pending home sales hit their highest level in seven months in February, according to new data from the National Association of Realtors.