Pending home sales made an unexpected jump in February, leading contract signings to their second highest mark since 2006, according to the National Association of Realtors.
NAR’s pending home sales index showed a 5.5 percent jump in homes under contract, a surprising bump from its prediction of 2.5 percent. That puts February’s pending homes total at the highest level since April 2016 and the second highest level since 2006, according to NAR.
Lawrence Yun, NAR chief economist, said February’s numbers were boosted by unseasonably warm weather that led to an early start to the Spring home sale market. The numbers are proof that 2017 could be another year of positive growth for the housing market.
“Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country,” Yun said in a press release. “The stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search man mean paying higher interest rates this year.”
The trend may not last long, however. Because housing inventory is at historic lows across the country, there are not enough houses to replace the ones under contract, Yun said. That is especially the case with lower-and-mid-market homes.
“The homes most buyers are in the market for are unfortunately the most difficult to find and ultimately buy,” Yun said. “The country’s healthy labor market is translating to great job security, but affordability is not improving because home prices in some areas are still outpacing incomes by three times or more because of tight supply. How much new and existing inventory there is on the market this spring will determine if sales can reach their full potential and finally start reversing the nation’s low homeownership rates.”
Contract signings increased 11.4 percent in the Midwest, 4.3 percent in the South, 3.4 percent in the Northeast and 3.1 percent in the West, according to NAR.