Economic Report: Pending home sales decline for 4th consecutive month, as interest rates rise: ‘Many people looking for a home have hit a ceiling’
The numbers: Pending home sales slid 4.1% in February, according to the monthly index released by the National Association of Realtors. The index reflects transactions where the contract has been signed for an existing-home sale, but the sale has not yet closed. Economists view it as an indicator for the direction of existing-home sales in subsequent months.
Key details: Compared to a year earlier, pending home sales were down 5.4%. February was the fourth consecutive month in which pending sales declined on a monthly basis and the ninth consecutive month in which contract signings were down year-over-year.
On a regional basis, sales were down in every region except the Northeast, where contract signings increased nearly 2% between January and February. The largest decline occurred in the Midwest, where the index measuring contract-signing activity declined 6%.
Looking ahead: “While sales are well off their late-2020 high, they remain above pre-COVID norms,” said Robert Kavcic, senior economist at BMO Capital Markets, in a research note.
“With mortgage rates moving toward 5.0%, we are seeing early signs of a shift in housing fundamentals, as many people looking for a home have hit a ceiling on their ability to afford a home,” said George Ratiu, manager of economic research at Realtor.com.