Homebuyers signed far more contracts to buy homes in February than expected, the latest sign that the housing market staged a comeback at the start of the year.
Pending home sales rose 1.8 percent from the prior month, the National Association of Realtors reported Tuesday, snapping a three-month losing streak and beating the median economist forecast for a 0.6 percent decline. On a year-over-year basis, contract signings remained down 0.8 percent.
The February data adds to a run of stronger-than-expected housing figures. Existing home sales came in at 4.09 million in February, well above the 3.86 million forecast and up from 4.02 million the prior month. Housing starts also beat expectations, hitting 1.49 million against a forecast of 1.35 million and a prior reading of 1.39 million.
The pending sales gain came as mortgage rates dipped to their lowest level since 2022 during February, offering some relief to buyers who have faced affordability pressures from elevated borrowing costs and rising prices. Pending sales, which cover contract signings rather than closings, typically lead existing home sales by one to two months.
“The slight gain in pending contracts appears to be driven by improved affordability conditions,” said NAR Chief Economist Lawrence Yun. “However, those conditions could reverse if higher oil prices lead to an uptick in mortgage rates.” Yun noted that the Midwest, the nation’s most affordable region, was the strongest performer, while the Northeast was held back by higher prices and tight inventory.
Regionally, the Midwest led with a 4.6 percent monthly gain, followed by the South at 2.7 percent and the West at 0.9 percent. The Northeast was the lone decliner, falling 3.6 percent. Year over year, the South and West posted gains while the Northeast tumbled 12.1 percent.
Among the 50 largest metro areas, San Diego posted the biggest annual gain at 13.5 percent, followed by Jacksonville at 12.1 percent.
Mortgage rates jumped sharply in the first week of March — their biggest weekly increase since September — as the Iran war stoked concerns that the Fed could put monetary policy on hold. Whether February’s affordability window translates into a sustained spring rebound may hinge on how oil markets and interest rates evolve in the weeks ahead.
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