Pending home sales rose significantly in February, climbing 8.2% month-over-month and 17.3% year-over-year.
Analysts were looking a decline of 1.0%.
Prior month-over-month was revised lower from -7.6% to -7.8%. Lawrence Yun of the National Association of Realtors says this is a sign that “may signal the early stages of a second surge of home sales this spring.”
The full release below from the NAR:
Pending home sales rose in February, potentially signaling a second surge of home sales in response to the home buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in February, rose 8.2 per cent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 per cent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said the improvement is another hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he said. “We need a second surge to meaningfully draw down inventory and definitively stabilise home values.”
The PHSI in the Northeast rose 9.0 per cent to 77.7 in February and is 18.9 per cent higher than February 2009. In the Midwest the index jumped 21.8 per cent to 97.9 and is 18.7 per cent above a year ago. Pending home sales in the South increased 9.2 per cent to an index of 107.0, and the index is 17.5 per cent higher than February 2009. In the West the index fell 4.8 per cent to 98.0 but is 14.6 per cent above a year ago.
“Anecdotal ly, we’re hearing about a rise of activity in recent weeks with ongoing reports of multiple offers in more markets, so the March data could demonstrate additional improvement from buyers responding to the tax credit,” Yun said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalised within one or two months of signing.
The index is based on a large national sample, typically representing about 20 per cent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.
Existing-home sales for March will be reported April 22 and the next Pending Home Sales Index will be on May 4; release times are 10 a.m. EDT.
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