WASHINGTON – March 29, 2017 – Pending home sales rebounded sharply in February to their highest level in nearly a year and second-highest level in over a decade, according to the National Association of Realtors®(NAR). All major U.S. regions saw a notable hike in contract activity last month.
The Pending Home Sales Index – a forward-looking indicator based on contract signings – jumped 5.5 percent to 112.3 in February from 106.4 in January. Last month's index reading is 2.6 percent higher year-to-year, and at its highest level since last April (113.6); and it's at the second-highest level 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 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."
Yun says weather also played a role since last month was "the warmest February in decades."
Looking ahead to the busy spring months, Yun expects to see continued ebb and flow in activity as new supply struggles to replace listings that are going under contract at a very quick pace. This is especially the case at the lower- and mid-market price ranges, where choices are minimal and prices are being bid higher by multiple offers.
"The homes most buyers are in the market for are, unfortunately, the most difficult to find and ultimately buy," says Yun. "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."
NAR forecasts that existing-home sales will be around 5.57 million this year, an increase of 2.3 percent from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 4 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.1 percent.
The pending sales index in the Northeast rose 3.4 percent to 102.1 in February, and is now 6.6 percent above a year ago. In the Midwest, the index jumped 11.4 percent to 110.8 in February, but it's still 0.6 percent lower than February 2016.
Pending home sales in the South climbed 4.3 percent to an index of 127.8 in February and are now 4.2 percent above last February. The index in the West increased 3.1 percent in February to 97.5, but it's still 0.2 percent higher than a year ago.
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