Following an 5.3% increase in January, pending home sales continued to trend higher in February, supported by low mortgage rates.
The Pending Home Sales Index (PHSI), reported by the National Association of Realtors (NAR), is a forward-looking indicator based on signed contracts. The PHSI grew 2.4% from 108.9 in January to 111.5 in February, the highest reading in three years. On a year-over-year basis, sales were 9.4% higher than a year ago.
Regionally, all four major regions saw an increase in month-over-month contract activity, as well as growth in year-over-year pending home sales transactions. The PHSI in the South grew to the highest reading since March 2006.
This month’s gains showed that the housing market had been healthy before the virus outbreak, including existing home sales reaching a 13-year high and new home sales showing strength in February. Despite these positive data, housing activity is likely to retrench as layoffs surge and the economy falters due to the coronavirus shutdowns.