Pending home sales fell slightly in February, after a solid gain in January.
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 declined 1.0% from 102.9 in January to 101.9 in February, and was 4.9% below the level one year ago, marking the fourteenth straight month of declines on an annualized basis.
Given a revised 4.3% gain last month, NAR stated the minor drop in February is not a major concern. Furthermore, NAR (and NAHB) expected monetary policy will remain unchanged — no interest rate increases in 2019. Even if there is a change, NAR anticipated the Fed will lower interest rates to stimulate the economy and the housing market.
The February PHSI were mixed regionally. It rose 1.7% and 0.5% in the South and West, but decreased 0.8% and 7.2% in the Northeast and Midwest. Year-over-year, the PHSI fell in all four major regions, ranging from a decrease of 2.6% in the Northeast to 9.6% in the West.
Housing starts, released earlier this week, saw a sharp decline in February, while existing home sales surged. These give a mixed picture of U.S. housing market. Builder confidence held steady at 62 in March, suggesting the market is stabilizing following the partial government slowdown at the end of 2018, while builders expect a solid spring home buying season.