With new home sales jumping and existing home sales dumping, pending home sales broke the tie this morning with a massive beat (up 5.5% MoM vs 2.5% expectations). NAR’s Larry Yun blames the surge in demand on higher stock market prices, warm weather, and fears of higher interest rates.
Midwest saw the biggest bump – after a big drop in Jan…
- Northeast up 3.4%; Jan. rose 2.3%
- Midwest up 11.4%; Jan. fell 5%
- South up 4.3%; Jan. rose 0.4%
- West up 3.1%; Jan. fell 9.8%
AfterJanuary’s big drop, Feb saw the biggest MoM spike since April 2010…
Lawrence Yun, NAR chief economist, says February’s convincing bump in pending sales is proof that demand is rising with spring on the doorstep.
“Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country,” he said.
“The stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year.”
Added Yun, “Last month being the warmest February in decades also played a role in kick-starting prospective buyers’ house hunt.”
“The homes most buyers are in the market for are unfortunately the most difficult to find and ultimately buy,” said Yun.
“The country’s healthy labor market is translating to greater job security, but affordability is not improving because home prices in some areas are still outpacing incomes by three times or more because of tight supply. How much new and existing inventory there is on the market this spring will determine if sales can reach their full potential and finally start reversing the nation’s low homeownership rate.”
However, it’s not all Trumpian ponies and rainbows, we do note that YoY pending home sales (unadjusted) fell 2.4%…the biggest annual drop since Nov 2014…