Pending Home Sales Grew for Third Consecutive Month, Up 0.8% in February

This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.

The National Association of Realtors® (NAR) released the latest monthly data for its pending home sales index. According to the NAR, "Pending home sales grew in February for the third consecutive month."

WASHINGTON (March 29, 2023) – Pending home sales grew in February for the third consecutive month, according to the National Association of REALTORS®. Three U.S. regions posted monthly gains, while the West declined. All four regions saw year-over-year decreases in transactions.

The Pending Home Sales Index (PHSI)* — a forward-looking indicator of home sales based on contract signings — improved 0.8% to 83.2 in February. Year-over-year, pending transactions dropped by 21.1%. An index of 100 is equal to the level of contract activity in 2001.

“After nearly a year, the housing sector’s contraction is coming to an end,” said NAR Chief Economist Lawrence Yun. “Existing-home sales, pending contracts and new-home construction pending contracts have turned the corner and climbed for the past three months.” (Read more here)

The chart below gives us a snapshot of the index since 2001, the first year data was analyzed. The latest index came in at 83.2, a 0.8% increase from last month. This is down from a 8.1% increase last month, however it marks the third consecutive monthly gain and was higher than the forecast of -2.3%.

Pending Home Sales

Over this time frame, the US population has grown by 17.8%. 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 above chart shows the percent off turn-of-the-century values. The index for the most recent month is currently 37% below its all-time high from August 2020. The population-adjusted index is 42% off its high from July 2005.