U.S. pending home sales unexpectedly increased in February for a third month, adding to signs that the housing market may be stabilizing after a tumultuous year.
The National Association of Realtors’ index of contract signings to purchase previously owned homes increased 0.8% last month to 83.2 – the highest since August – according to data released Wednesday. The median estimate in a Bloomberg survey of economists called for a 3% decline.
The increase in sales indicates the housing market may be getting back on its feet after last year’s rapid run-up in borrowing costs. Mortgage rates eased last week to a six-week low, helping drive demand to purchase a home.
They may decline further if the unfolding banking crisis continues to drive down Treasury yields, and the Federal Reserve has signaled it’s nearly done hiking interest rates.
“After nearly a year, the housing sector’s contraction is coming to an end,” Lawrence Yun, NAR’s chief economist, said in a statement.
Signings increased in February in all regions but the West, while the increase was led by a 6.5% advance in the Northeast. However, on an unadjusted basis, contract signings were down 21.1% from a year ago.
There are some other signs the residential real estate sector is feeling a reprieve. Separate data last week showed sales of previously owned homes surged by the most since mid-2020 in February, ending a yearlong decline. It also pointed to the first decline in pre-owned home prices in more than a decade.
The pending home sales report is often seen as a leading indicator of existing-home sales given homes typically go under contract a month or two before they’re sold.