Pending Home Sales Rise More Than Expected in February

The National Association of Realtors® (NAR) released the latest monthly data for its pending home sales index. The index rose 1.6% in February to 75.6, exceeding the forecasted 1.4% growth. Pending home sales are down 7.0% from one year ago.

"While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year," said NAR Chief Economist Lawrence Yun. "Ongoing job gains are clearly increasing demand along with more inventory."

"The high-cost regions in the Northeast and West experienced pullbacks due to affordability challenges," added Yun. "Home prices rising faster than income growth is not healthy and adds challenges for first-time buyers."

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Pending Home Sales Background

The pending home sales index (PHSI) was created by the National Association of Relators to track home sales where the contract is signed, but the transaction has not yet closed. An index of 100 is equal to the level of contract activity in 2001. The PHSI is a leading economic indicator of future existing home sales.

The chart below gives us a snapshot of the index since 2001, the first year data was analyzed. Pending Home Sales Index

Over this time frame, the US population has grown by 18.4%. 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 above chart shows the percent off turn-of-the-century values. The index for the most recent month is currently 41% below its all-time high from August 2020. The population-adjusted index is 48% off its high from April 2005.