The National Association of Realtors (NAR) Monday morning released its data on pending sales of existing homes for February. The pending home sales index rose 3.5% to 109.1 from a downwardly revised January reading of 105.4. The February reading is up 0.7% year over year, the smallest monthly gain in the past 18 months.
The consensus estimate called for a month-over-month increase of 1.5% in pending sales to a reading of 106. The index reflects signed contracts, not sales closings. An index reading of 100 equals the average level of contract signings during 2001.
The index has been above 100 (the “average” reading) for 18 straight months.
The NAR’s chief economist noted:
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. 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.
Any further moderation in prices would be a welcome development this spring. Particularly in the West, where it appears a segment of would-be buyers are becoming wary of high asking prices and stiff competition.
2016 existing-homes sales are forecast rise about 2.4% to around 5.38 million, up from a pace of 5.34 million in 2015. The national median existing-home price for all of this year is expected to rise by 4% to 5%. In 2015, existing-home sales rose 6.3% and prices rose 6.8%.
By region, February pending home sales decreased by 0.2% to an index score of 94.0 in the Northeast, 12.6% higher than in February of 2015. In the South, sales rose by 2.1% to an index score of 122.4, but are now 0.4% lower than the February 2015 index.
Sales rose by 0.7% in the West to an index score of 96.4 and are up 6.2% compared with February 2015. Sales in the Midwest jumped 11.4% to a February index score of 112.6, now 2.5% higher than February 2015.
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