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First Cut: February Pending Home Sales Index highest in nearly three years

The NAR Pending Home Sales Index for February managed to build on the strength in the January report and gain 2.4% to 111.5 in February after 108.9 (previously 108.0) in the prior month. Compared to a year-ago, the index rose 9.4%.

The number of contracts signed was the best in about three years. Low mortgage rates and a strong labor market had persuaded many consumers that it was a favorable time to buy a home. The pace of sales showed consumer got a jump on the spring buying season. However, the emergence of COVID-19 as a pandemic and measures taken to combat its spread in the US are likely to lead to a good number of contracts being cancelled as steady incomes needed to obtain a mortgage are in jeopardy. The March data will be far less positive.

In February, pending sales were up across regions. The South had a scant increase of 0.1% although that followed on a sharp rise in the prior month. Contracts were up 2.8% in the Northeast, 4.5% in the Midwest, and 4.6% in the West as buyers anxious to take advantage of low mortgage rates reached agreements with sellers for available units.

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