In February, pending home sales saw a modest yet encouraging increase of 1.6%, as reported by the National Association of Realtors® (NAR). Despite year-over-year decreases across all four U.S. regions, this uptick signals a gradual rebound in the housing market.

The Pending Home Sales Index (PHSI), a key metric reflecting contract signings and indicative of future home sales, reached 75.6 in February. This figure represents a 7.0% decline compared to the same period last year, with the index benchmarked to 2001 levels.

The significance of this growth was underscored by Chief Economist Lawrence Yun of the NAR, who noted that while modest sales growth might not be particularly exhilarating, it does indicate a gradual and steady improvement from the lows experienced late last year. He credited this positive trend to sustained job gains and an increase in housing inventory.

Regional disparities were evident in the data. The Northeast saw a marginal decrease of 0.3% in its PHSI, while the Midwest experienced a notable 10.6% surge, albeit still down 2.5% year-over-year. In the South, the index rose by 1.1%, though it remained 8.5% lower than the previous year. Conversely, the West witnessed a 6.5% decline, marking a 7.9% drop from February 2023.

Yun pointed out the challenges faced by high-cost regions, particularly in the Northeast and West, where affordability concerns are hindering sales. He emphasized the detrimental impact of home prices outpacing income growth, especially for first-time buyers.

Looking ahead, Yun expressed optimism regarding a potential increase in housing inventory, buoyed by recent growth in construction activity. Moreover, he anticipated a surge in listings as sellers, who postponed sales in the past two years, seek to capitalize on changing life circumstances.

As the housing market continues its slow but steady recovery, these developments offer a glimmer of hope for prospective buyers and sellers alike.