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Pending home sales in the United States exhibit a 7% year-on-year decline in February, indicating a slowdown in housing market activity. Economic factors like rising mortgage rates and supply constraints contribute to the decrease, posing challenges for prospective homebuyers amidst evolving market conditions and affordability concerns.
According to the National Association of Realtors, pending U.S. home sales in February 2024 grew 1.6% month-over-month from January 2024. The Midwest and South posted monthly gains in transactions while the Northeast and West recorded losses. All four U.S. regions registered year-over-year decreases.
The Pending Home Sales Index (PHSI) - a forward-looking indicator of home sales based on contract signings - increased to 75.6 in February 2024. Year over year, pending transactions were down 7.0%. An index of 100 is equal to the level of contract activity in 2001.
Lawrence Yun
"While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year," said NAR Chief Economist Lawrence Yun. "Ongoing job gains are clearly increasing demand along with more inventory."
Pending Home Sales Regional Breakdown
The Northeast PHSI decreased 0.3% from last month to 63.4, a decline of 9.0% from February 2023. The Midwest index soared 10.6% to 81.6 in February, down 2.5% from one year ago.
The South PHSI rose 1.1% to 89.5 in February, falling 8.5% from the prior year. The West index fell 6.5% in February to 57.1, down 7.9% from February 2023.
"The high-cost regions in the Northeast and West experienced pullbacks due to affordability challenges," added Yun. "Home prices rising faster than income growth is not healthy and adds challenges for first-time buyers."
Yun further noted, "There will be a steady rise in inventory from recent growth in home building. Additionally, many sellers, who delayed listing in the past two years, will begin to put their homes on the market to move to a different home that better fits their new life circumstances - such as changes in family composition, jobs, commuting patterns and retirees wanting to be closer to their grandkids."
Source: World Property Journal
