Pending Home Sales Index Decline for Second Month in a Row in February

The National Association of Realtors® (NAR) has reported that their Pending Homes Sales Index (PHSI) — which is based on signed real estate contracts, not actual closings, for existing single-family homes, condos, and co-ops — declined for the second month in a row, failing -10.6% in February to a reading of 110.3. An index of 100 is equal to the level of contract activity in 2001. The NAR notes that contract transitions fell in all four major U.S. regions. Year-over-year contract signings declined -0.5%. In a statement prepared for the release of the PHSI, Lawrence Yun, NAR’s chief economist said, “The demand for a home purchase is widespread, multiple offers are prevalent, and days-on-market are swift, but contracts are not clicking due to record-low inventory. Demand, interestingly, does not yet appear to be impacted by recent modest rises in mortgage rates.” According to Yun, even with rising mortgage costs, rates are expected to remain relatively low at no more than 3.5% in 2021.