Contract signings for existing homes are starting to show some signs of recovery.
Pending home sales grew 1.6% in February from the previous month, according to new data from the National Association of Realtors. The 75.6 index reading is the biggest month-over-month gain since last December. An index level of 100 is equal to the pace of contract activity in 2001.
The gain in the index, a leading indicator to assess the housing market’s health, shows how a pickup in inventory is boosting the market as high rates continue to keep both buyers and sellers on the sidelines, and leaving pending sales down in the resale market by 7.0% annually.
Mortgage rates hovered over 7% every day around mid-February, turning off rate-sensitive buyers.
“While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year,” said NAR chief economist Lawrence Yun in a press release. “Ongoing job gains are clearly increasing demand along with more inventory.”
He added: “There will be a steady rise in inventory from recent growth in homebuilding. 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.”
Regionally, contract signings in the Northeast fell 0.3% from last month, while the West recorded a monthly dip of 6.5% in February. Meanwhile, the Midwest saw a 10.6% gain in transactions with sales under contract, while the South rose 1.1% in February.
“The high-cost regions in the Northeast and West experienced pullbacks due to affordability challenges,” Yun said. “Home prices rising faster than income growth is not healthy and adds challenges for first-time buyers.”
