The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts, decreased 0.8% in February to 93.9 from a downwardly revised January level of 94.7. The PHSI now has declined eight straight months, and is at the lowest level since the 92.2 reported in October 2011. The February 2014 PHSI reported by the National Association of Realtors (NAR) was 10.5% lower than the same period a year ago.
The February PHSI increased in the Midwest and West by 2.8% and 2.3% respectively, and fell in the Northeast and South by 2.4% and 4.0% respectively. All regions fell year-over-year, ranging from 7.4% in the Northeast to 16.5% in the West.
Two days ago Census reported a 3.3% decrease in February new home sales. For the second consecutive month, the unusually severe winter has slowed the housing market. However, the growth in household formations and strong pent-up demand will move the market forward later this year. The downward slide in the PHSI indicates existing home sales will remain flat over the next two months.