Pending home sales posted a strong rebound in February, soaring to the highest level in nearly a year and the second highest level in more than a decade, the National Association of REALTORS® reported Wednesday. All major regions saw an uptick in sales contracts last month.
NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 5.5 percent month over month to an 112.3 reading in February. The index is now 2.6 percent higher than a year ago and is at the highest level since last April (113.6) and the second highest since May 2006 (112.5).
“Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country,” says Lawrence Yun, NAR’s chief economist. “The stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year.”
Further, the warmer-than-usual weather across the country may have helped give an earlier start to the spring buying season. Yun notes that last month was the warmest February in decades, which may have also “played a role in kick-starting prospective buyers’ house hunt.”
Yun expects activity to fluctuate over the spring season, however, as the lack of supply continues to limit the number of homes sold, particularly in the lower and mid-market price ranges.
“The homes most buyers are in the market for are unfortunately the most difficult to find and ultimately buy,” Yun says. “The country’s healthy labor market is translating to greater job security, but affordability is not improving because home prices in some areas are still outpacing incomes by three times or more because of tight supply. How much new and existing inventory there is on the market this spring will determine if sales can reach their full potential and finally start reversing the nation’s low homeownership rate.”
Source: National Association of REALTORS®