Pending home sales increased modestly in February despite rising mortgage rates, growing 1.6% month over month, according to the newest data released Thursday by the National Association of Realtors (NAR).
NAR’s Pending Home Sales Index increased to 75.6 in February, up from 74.3 in January. On a year-over-year basis, pending sales were down 7%. For comparison, the index is benchmarked at a reading of 100 based on 2001 contract activity.
“While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year,” NAR chief economist Lawrence Yun said in a statement. “Ongoing job gains are clearly increasing demand along with more inventory.”
Meanwhile, new home sales fell slightly in February but were still 5.9% higher than one year ago. Existing home sales surged 9.5% from January to February due to steadily growing inventory. Overall, active inventory grew 14.8% annually in February, according to data from Realtor.com.
An influx of more affordable inventory also granted home prices a certain stability compared to a year ago, according to Realtor.com. For instance, the number of available homes priced between $200,000 to $350,000 increased by 20.6% annually in February 2024.
Overall, both new home sales and pending home sales leveled off compared to December’s surge because of rising mortgage rates.
The Midwest and South posted monthly gains in pending transactions, while the Northeast and West recorded losses. On a year-over-year basis, all four U.S. regions registered losses, NAR reported.
“There will be a steady rise in inventory from recent growth in home building,” Yun added. “Additionally, many sellers, who delayed listing in the past two years, will begin to put their homes on the market to move to a different home that better fits their new life circumstances, such as changes in family composition, jobs, commuting patterns and retirees wanting to be closer to their grandkids.”
