US Pending Home Sales Barely Bounce Off Record Lows Despite Tumbling Rates In Feb

After reaching a record low last month - with the decline blamed on weather - pending home sales bounced modestly in February (up 1.8% MoM vs -0.6% MoM exp and -10.% MoM prior).

Year-over-year home sales continue to decline (down 0.6% YoY)...

Source: Bloomberg

...just barely off of all-time-record lows...

Source: Bloomberg

Pending home sales in the South, the biggest home-selling region in the country, increased 2.7%.

They rose 4.6% in the Midwest and edged up in the West.

Contract signings dropped in the Northeast.

Mortgage-rates have tumbled (to their lowest since 2022) - helping affordability - so what is holding pending home sales back?

Source: Bloomberg

“The slight gain in pending contracts appears to be driven by improved affordability conditions. However, those conditions could reverse if higher oil prices lead to an uptick in mortgage rates,” NAR Chief Economist Lawrence Yun said in a statement.

Indeed, it certainly won't help in April that in the first week of March, mortgage rates jumped by the most since September as war with Iran sparked concerns about inflation.

Housing affordability has been a key issue ahead of November’s midterm election. President Trump has taken several steps to boost home ownership, including signing two executive orders last week aimed at improving access to mortgage credit and easing environmental rules to speed up development projects.

As a reminder, pending-homes sales tend to be a leading indicator for previously owned homes, as houses typically go under contract a month or two before they’re sold.