Pending home sales rebounded in February, hitting the highest level in almost a year and the second-highest level in more than a decade, according to the latest report from the National Association of Realtors.
The Pending Home sales Index, a forward-looking indicator based on contract signings, surged 5.5% to 112.3 in February, up from 106.4 in January. The index hit 2.6% above last year to its highest point since April’s 113.6 and the second highest since May 2006.
Last month, the Pending Home Sales Index dropped to the lowest level in a year.
“Buyers came back in force last month as a modest, seasonal uptick in listings was enough to fuel an increase in contract signings throughout the country,” NAR Chief Economist Lawrence Yun said.
“The stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year,” Yun said. “Last month being the warmest February in decades also played a role in kick-starting prospective buyers’ house hunt.”
All major regions saw a drastic increase from last month’s levels. The index increased 3.4% in February to 102.1 in the Northeast, 11.4% to 110.8 in the Midwest, 4.3% to 127.8 in the South and 3.1% to 97.5 in the West.
In the spring home-buying months ahead, home sale activity will see ebbs and flows as new housing supply struggles to replace listings that are quickly going under contract.
“The homes most buyers are in the market for are unfortunately the most difficult to find and ultimately buy,” Yun said. “The country’s healthy labor market is translating to greater job security, but affordability is not improving because home prices in some areas are still outpacing incomes by three times or more because of tight supply.”
“How much new and existing inventory there is on the market this spring will determine if sales can reach their full potential and finally start reversing the nation’s low homeownership rate,” he said.
NAR forecasts existing-home sales to hit 5.57 million this year, an increase of 2.3% from 2016. The national median existing-home price is expected to rise 4%, up from 2016’s increase of 3.8%.