Following a series of volatile winter months, US pending home sales rose in February to their highest level since July.
The latest reading of the National Association of Realtors’ (NAR) Pending Home Sales Index saw the index level rise to 109.1 in February, up 3.5 percent from January and 0.7 percent from February 2015’s level.
The index, a forward-looking indicator that tracks contract signings on existing homes, has increased year-over-year for 18 straight months. However, according to NAR, when comparing February 2016 to the same month last year, the gain was the smallest increase seen in that 18-month period. February’s gain also followed a steep month-over-month decline in January, when the index logged a 3 percent drop.
Despite the small year-over-year gain, NAR’s chief economist, Lawrence Yun, called the pending sales activity levels “promising” in a media release that accompanied today’s new data.
“After some volatility this winter, the latest data is encouraging in that a decent number of buyers signed contracts last month, lured by mortgage rates dipping to their lowest levels in nearly a year and a modest, seasonal uptick in inventory,” he said in the release.
“Looking ahead, the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what’s being scooped up by a growing pool of buyers. Without adequate supply, sales will likely plateau.”
Breaking it down by region, the Midwest led the country with an 11.4 percent increase over January. Pending home sales in the South and West saw more modest month-over-month increases, at 2.1 percent and 0.7 percent, respectively. Only the Northeast saw a decline over January, with a small 0.2 percent drop.
According to Reuters, economists polled by the news agency had forecast a 1.2 percent rise in contract signings for February.