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Pending Home Sales Fall Amid Tight Supply
Pending home sales fell in February, marking four consecutive months of transaction decreases, according to the National Association of Realtors. Three of the four major U.S. regions saw contract signings fall month-over-month, with the Northeast being the only area that reported an increase. All four regions registered a decline in year-over-year contract activity.
The Pending Home Sales Index, PHSI, a forward-looking indicator of home sales based on contract signings, declined 4.1% to 104.9 in February. Year-over-year, transactions dropped 5.4%. An index of 100 is equal to the level of contract activity in 2001.
“Pending transactions fell in February mainly due to the low number of homes for sale,” said Lawrence Yun, NAR’s chief economist. “Buyer demand is still intense, but it’s as simple as ‘one cannot buy what is not for sale.’”
Along with climbing home prices, Yun added that now buyers must grapple with rising mortgage rates and noted that shoppers will likely want to lock in before rates increase further.
Yun forecasts mortgage rates to be about 4.5% to 5% for the remainder of the year and expects about a 7% reduction in home sales in 2022 compared to 2021.
“Home prices themselves are still on solid ground,” he added. “They may rise around 5% by year’s end and we should see much softer gains in the second half of the year.”
- ◦Sale/Acquisition
