NAR: Pending Home Sales Continue to Cool

March 28, 2014

For the eighth consecutive month, contracts to purchase previously owned homes took a tumble in February, but the slowdown may be nearing an end, according to the National Association of REALTORS®’ latest reading from its Pending Home Sales Index, a forward-looking indicator based on contract signings.

The latest index showed big regional differences in February. The Midwest and West posted modest increases in February, but were offset by declines in the Northeast and South. Still, all regions’ pending home sales are below year ago levels, NAR reports.

Overall, the Pending Home Sales Index fell 0.8 percent in February, 10.5 percent below February 2013. It also marks the lowest reading on the index since February 2011.

Lawrence Yun, NAR’s chief economist, sees the slowdown in home sales finally thawing for spring.

“Contract signings for the past three months have been little changed, implying the market appears to be stabilizing,” Yun says. “Moreover, buyer traffic information from our monthly REALTOR® survey shows a modest turnaround, and some weather delayed transactions should close in the spring.”

The NAR report also notes that a projected 19 percent rise in housing starts this year will help reduce some of the pressure in markets on home prices. The national median existing-home price is expected to rise 5.5 to 6 percent this year compared to the 11.5 percent increase in 2013, according to NAR.

Pending Home Sales by Region

  • Northeast: pending home sales fell 2.4 percent in February month-over-month and are 7.4 percent below year ago levels.
  • Midwest: pending home sales increased 2.8 percent in February month-over-month, but are 8.5 percent below year ago levels.
  • South: pending home sales dropped 4 percent in February month-over-month, and are 9.3 percent below a year ago.
  • West: pending home sales increased 2.3 percent in February month-over-month, but are 16.5 percent below February 2013.

Source: National Association of REALTORS®

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Pending Home Sales Mostly Flat in January