Fueled by positive job growth and an increase in available housing, the National Association of Realtors’ Pending Home Sales Index rose 1.6 percent in February, according to data released Thursday.
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Pending home sales in February increased by 1.6 percent as modest inventory gains and an uptick in hiring provided consumers with more options, according to data released Thursday by the National Association of Realtors.
The Pending Home Sales Index (PHSI), which suggests future sales based on contract signings, rosed to 75.6 in February, according to the data. On an annual basis, pending sales declined by 7 percent. The Midwest and South tallied the most significant growth while the Northeast and West posted monthly losses.
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Lawrence Yun | Chief economist at the National Association of Realtors
“While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year,” NAR Chief Economist Lawrence Yun said in a statement. “Ongoing job gains are clearly increasing demand along with more inventory.”
The U.S. added 275,000 jobs in February, an increase from the 229,000 jobs added the previous month.
The Northeast PHSI saw the greatest annual decline, with a drop of 9 percent from February 2023. That region’s index was 63.4, down 0.3 percent from the previous month.
Meanwhile, the PHSI in the South fell 8.5 percent year over year, while rising 1.1 percent on a monthly basis to 89.5.
The West’s index was down 7.9 percent from February 2023 and down 6.5 percent from January 2024 to 57.1.
The Midwest PHSI was only down 2.5 percent year over year, as it jumped 10.6 percent from January 2024 to 81.6.
“The high-cost regions in the Northeast and West experienced pullbacks due to affordability challenges,” Yun added. “Home prices rising faster than income growth is not healthy and adds challenges for first-time buyers.”
The recent uptick in activity from homebuilders should continue to bolster inventory, Yun noted. Housing starts spiked 10.7 percent higher in February from the previous month, a recent Census Bureau report showed.
“There will be a steady rise in inventory from recent growth in home building,” he said. “Additionally, many sellers, who delayed listing in the past two years, will begin to put their homes on the market to move to a different home that better fits their new life circumstances — such as changes in family composition, jobs, commuting patterns and retirees wanting to be closer to their grandkids.”