New data from the National Association Realtors shows that pending home sales had rebounded sharply last month, to reach their highest level in roughly a year; the second-highest level in more than ten years. As a matter of fact, all major regions found quite a significant increase in contract activity in February.
The forward-looking Pending Home Sales Index indicator is a metric of signed sales contracts to buy existing homes. This marker jumped more than 5 percent in February, resting at 2.6 percent higher than the same month from the year prior. According to the National Association of Realtors, this is the second fastest pace in more than a decade.
The US housing market has not been doing so well, as inventory at the beginning of this year was notably lower than from the year before; home price gains have been accelerating for the past few months.
But things are changing. NAR chief economist Lawrence Yun notes, “Buyers came back in force last month as a modest, seasonal uptick in listings was enough to fuel an increase in contract signings throughout the country. 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.”
In addition, pending home sales rose 3.4 percent in the Northeast region and a massive 11.4 percent in the Midwest region, in the month of February. In the South, sales were up 4.3 percent and in the West sales were up 3.1 percent.
Although things are moving in the right direction, though, Yun warns that the industry may not be able to keep pace with demand. Entry-level home buyers, for example, are having a harder time finding options within their price range as homes are selling much faster today than in the past 20 years.
Yun goes on to say, “The homes most buyers are in the market for are unfortunately the most difficult to find and ultimately buy. 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.”