Pending Home Sales Jump in February, Highest in a Year

This morning the National Association of Realtors released the February data for their Pending Home Sales Index. Here is an excerpt from the latest press release:

Lawrence Yun, NAR chief economist, says February's convincing bump in pending sales is proof that demand is rising with spring on the doorstep. "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," he said. "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 may mean paying higher interest rates later this year." (more here).

The chart below gives us a snapshot of the index since 2001. The MoM change came in at 5.5%. Investing.com had a forecast of 2.4%.

Pending Home Sales

Over this time frame, the US population has grown by 14.4%. For a better look at the underlying trend, here is an overlay with the nominal index and the population-adjusted variant. The focus is pending home sales growth since 2001.

Pending Home Sales Growth

The index for the most recent month is 12% below its all-time high in 2005. The population-adjusted index is 19% off its 2005 high.

Pending versus Existing Home Sales

The NAR explains that "because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing Home Sales by a month or two." Here is a growth overlay of the two series. The general correlation, as expected, is close. And a close look at the numbers supports the NAR's assessment that their pending sales series is a leading index.

Pending Home Sales Growth