Pending home sales experienced a notable increase in February, rising 1.8% from the previous month, according to the National Association of REALTORS®. This uptick suggests a potential for a robust spring selling season, despite a slight year-over-year dip of 0.8%.
Key Takeaways
- Pending home sales rose 1.8% month-over-month in February.
- Sales declined 0.8% year-over-year.
- The Midwest, South, and West regions saw month-over-month increases in pending sales.
- Improved affordability conditions are cited as a primary driver for the rise.
- Concerns remain about potential impacts of rising oil prices on mortgage rates.
Regional Performance
On a month-over-month basis, the Midwest, South, and West regions all observed growth in pending sales. Conversely, the Northeast experienced a decline. However, when looking at year-over-year figures, the South and West showed gains, while the Northeast and Midwest saw decreases.
Economic Factors Influencing the Market
NAR Chief Economist Lawrence Yun attributed the modest increase in pending contracts to "improved affordability conditions." He cautioned, however, that this positive trend could be jeopardized if escalating oil prices lead to an increase in mortgage rates. Yun highlighted the Midwest as the strongest performer in February, benefiting from its status as the most affordable region. The Northeast, conversely, faced headwinds from elevated home prices and a constrained supply.
Top Performing Metropolitan Areas
Several major metropolitan areas demonstrated significant year-over-year growth in pending home sales. Among the 50 largest metro areas, the top performers included:
- San Diego – Chula Vista – Carlsbad, California (+13.5%)
- Jacksonville, Florida (+12.1%)
- San Jose – Sunnyvale – Santa Clara, California (+10.6%)
- Denver – Aurora – Centennial, Colorado (+10.5%)
- Miami – Fort Lauderdale – West Palm Beach, Florida (+10.0%)
- Phoenix – Mesa – Chandler, Arizona (+9.8%)
- Sacramento – Roseville – Folsom, California (+9.3%)
- Kansas City, Missouri (+8.7%)
- Austin – Round Rock – San Marcos, Texas (+8.1%)
- Oklahoma City, Oklahoma (+8.7%)
Outlook for the Spring Selling Season
First American Senior Economist Sam Williamson expressed optimism, stating that February’s increase in pending sales indicates the housing market is recovering from its winter lull just as the spring buying season commences. While acknowledging that mortgage rate volatility might slightly affect buyer sentiment, Williamson noted that the market is entering spring on a stronger footing than the previous year. Factors such as enhanced buying power, sustained pent-up demand, and a gradual improvement in housing inventory are expected to continue supporting buyer interest, potentially leading to more robust sales activity in the coming months.