Pending home sales increased 1.6% in February compared with January but were down 7.0% compared with February 2023, according to the National Association of Realtors (NAR).
Month-over-month, contract signings climbed in the Midwest and South but sank in the Northeast and West. Compared to one year ago, pending home sales declined in all U.S. regions.
“While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year,” says Lawrence Yun, chief economist for NAR, in a statement. “Ongoing job gains are clearly increasing demand along with more inventory.”
Month-over-month, pending home sales decreased 0.3% in the Northeast and fell 6.5% in the West but were up 10.6% in the Midwest and 1.1% in the South.
“The high-cost regions in the Northeast and West experienced pullbacks due to affordability challenges,” Yun says. “Home prices rising faster than income growth is not healthy and adds challenges for first-time buyers.
“There will be a steady rise in inventory from recent growth in home building,” he adds. “Additionally, many sellers, who delayed listing in the past two years, will begin to put their homes on the market to move to a different home that better fits their new life circumstances – such as changes in family composition, jobs, commuting patterns and retirees wanting to be closer to their grandkids.”
“Even though mortgage rates increased in February, the supply of existing homes for sale ticked up as well. Affordability constraints and still-low inventory levels will continue to dampen housing market potential,” adds Odeta Kushi, deputy chief economist for First American, in a statement. “Overall, the level of sales activity remains sluggish, but the uptick in pending sales is a welcome and promising sign for the housing market.”
Photo: Gabrielle Henderson