For the third consecutive month, pending home sales grew in February, according to the National Association of Realtors (NAR). While three U.S. regions posted monthly gains, all four regions saw year-over-year decreases in transactions.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, grew 0.8% to 83.2 in February. However, year-over-year pending transactions dropped by 21.1%. A PHSI reading of 100 is equal to the level of contract activity in 2001, NAR says.
“After nearly a year, the housing sector’s contraction is coming to an end,” says 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.”
The Northeast PHSI increased 6.5% month over month to 72.5, a drop of 17% from February 2022. The West decreased 2.4% in February to 64.6, a decrease of 28.4% from one year prior.
The Midwest index rose 0.4% to 84.9 in February, decreasing 16.5% from one year ago. In the South, PHSI grew 0.7% to 99.3 in February, falling 21.7% from 2022.
“The affordable U.S. regions—the Midwest and South—are leading the recovery,” Yun adds. “Mortgage rates have improved in recent weeks after the federal government guaranteed the status of most mortgages amid uncertainty in the financial market. While access to commercial mortgage loans could become increasingly difficult, residential mortgage loans are expected to be more readily available.”
