Pending home sales hit a seven-month high in February, getting a big boost from an increase in the Midwest.
The National Association of Realtors said Monday that its pending home sales index, which is based on contract signings of existing homes, rose 3.5 percent to 109.1 last month, the highest level since July, after a 3 percent drop in January to 105.4.
{mosads}”After some volatility this winter, the latest data is encouraging in that a decent number of buyers signed contracts last month, lured by mortgage rates dipping to their lowest levels in nearly a year and a modest, seasonal uptick in inventory,” said Lawrence Yun, NAR chief economist.
“Looking ahead, the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what’s being scooped up by a growing pool of buyers,” Yun said.
“Without adequate supply, sales will likely plateau.”
Regionally, the Midwest saw an 11.4 percent increase, sales in the South increased 2.1 percent, pending sales climbed 0.7 percent in the West, while the index declined 0.2 percent in the Northeast.
Despite last month’s slump in existing-home sales, Yun noted that falling prices will make housing more affordable and could help bolster sales.
“Any further moderation in prices would be a welcome development this spring,” Yun said. “Particularly in the West, where it appears a segment of would-be buyers are becoming wary of high asking prices and stiff competition.”
Existing-homes sales this year are forecast to be around 5.38 million, an increase of 2.4 percent from 2015.
The national median existing-home price for all of this year is expected to increase between 4 and 5 percent.
In 2015, existing-home sales increased 6.3 percent and prices rose 6.8 percent.