Pending home sales in February rose 2.4% from the prior month, the second consecutive increase, according to a report Tuesday from the National Association of Realtors.
February’s reading shows the health of the housing market prior to the coronavirus-induced shutdown, said Lawerence Yun, NAR’s chief economist.
According to Yun, February’s data does not capture the significant fallout from the pandemic, or the measures taken to control the outbreak.
“Numbers in the coming weeks will show just how hard the housing market was hit, but I am optimistic that the upcoming stimulus package will lessen the economic damage and we may get a V-shaped robust recovery later in the year,” Yun said.
“Housing, just like most other industries, suffered from the coronavirus crisis, but once this predicament is behind us and the habit of social distancing is respected, I’m encouraged there will be continued home transactions though with more virtual tours, electronic signatures, and external home appraisals,” Yun said. “Many of the home sales that are likely to be missed during the first part of 2020 may simply be pushed into late summer and autumn parts of the year.”
While the majority of the nation’s markets have seen a slowdown, markets drawing some of the most significant buyer attention include Colorado Springs, Colorado; Lafayette, Indiana; Modesto, California; Rochester, New York; and Sacramento, California, according to Yun.
Of all U.S. regions, February’s pending home sales rose the most in the West, increasing 4.6% to 97.1, a jump of 10.8% from a year ago.
This was followed by the Midwest where the index increased 4.5% to 110.1, representing a 14.9% increase from 2019.
During February, pending home sales were the least in the South, which experienced a gain of 0.1% to an index of 129.2, increasing 7.1% from the same time last year.
The Northeast increased by 2.8% to 96.3 in February, which is 5.9% higher than a year ago.
Although February’s reading would normally foreshadow a healthy spring homebuying season, Realtor.com Chief Economist Danielle Hale warns sales are likely to slow as buyers refrain from entering the market due to the coronavirus pandemic.
“Pending home sales data for February showed a 2.4% increase from January, and contract signings are up 9.4% from a year ago,” Hale said. “Normally, this would be a great indicator for the spring season, especially on top of stellar February home sales data and housing starts that are up notably from a year ago, however, this year will be anything but normal for the housing market.”
“With COVID-19 hampering travel and in-person interactions, home sales are expected to slow in April and May, what are normally busy spring months,” she said. “Some of this activity will likely be shifted to later in the year, but when is still an open question. First, we need to see the spread of COVID reduced or the impact minimized by treatments or vaccines.”