According to the National Association of REALTORS®, there was an increase in pending home sales for the third straight month in February. While three regions in the United States experienced monthly growth, the West saw a decline. However, all four regions saw a drop in transactions when compared to the same period last year.
In February, the Pending Home Sales Index (PHSI) increased by 0.8% to reach 83.2. The PHSI is a measure that looks ahead and predicts home sales based on contract signings. However, when compared to the same period last year, pending transactions decreased by 21.1%. It is important to note that an index score of 100 represents the level of contract activity in 2001.
According to Lawrence Yun, the Chief Economist of the National Association of REALTORS®, the housing sector’s decline is finally coming to an end after almost a year. Yun stated that existing-home sales, pending contracts, and new-home construction pending contracts have all shown positive growth over the past three months.
Regional Breakdown for Pending Home Sales
In February, the Pending Home Sales Index (PHSI) for the Northeast region increased by 6.5% to reach 72.5. However, this still represents a decrease of 17% compared to February 2022. On the other hand, the Midwest region saw a slight improvement of 0.4%, with a PHSI of 84.9. However, when compared to the same period last year, the Midwest region also experienced a decline of 16.5% in pending home sales.
In February, the Pending Home Sales Index (PHSI) for the South region increased by 0.7% to reach 99.3. However, when compared to the same period last year, the region saw a significant decline of 21.7% in pending home sales. Meanwhile, the West region experienced a decrease of 2.4% in its PHSI, with a score of 64.6. Compared to February 2022, this represents a significant decrease of 28.4% in pending home sales.
Lawrence Yun also noted that the Midwest and South regions, which are more affordable, are driving the housing market recovery. He attributed this positive trend to the recent improvement in mortgage rates, which stabilized after the federal government guaranteed the status of most mortgages, alleviating some uncertainty in the financial market. Yun predicts that while commercial mortgage loans could become harder to access, residential mortgage loans should remain easily available.