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Economy in Brief

U.S. Pending Home Sales Move Lower in February
by Tom Moeller  March 25, 2022

• Pending home sales decline to lowest level since May 2020.

• Sales fall in most of country.

The home buying market remains weak and disordered. The Pending Home Sales Index from the National Association of Realtors fell 4.1% in February (-5.4% y/y) following a 5.8% January fall, revised from -5.7%. It was the fourth consecutive monthly decline with sales down 18.0% from the August 2020 peak.

The Realtors Association indicated, "Pending transactions diminished in February mainly due to the low number of homes for sale. Buyer demand is still intense, but it’s as simple as ‘one cannot buy what is not for sale.'"

Pending home sales declined in most major regions of the country. Sales in the Midwest posted the largest decline, falling 6.0% during February (-5.2% y/y) to the lowest level since March 2021. In the West, sales fell 5.4% (-5.3% y/y) and were 21.5% below the August 2020 high. February sales in the South declined 4.4% (-4.3% y/y) to the lowest level since April 2020. Moving upward by 1.9% last month (-9.2% y/y) were sales in the Northeast. Pending home sales here, nevertheless, remained 24.0% below the August 2020 high.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's PREALTOR database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the SURVEYW database.

The Red Hot Housing Market: the Role of Policy and Implications for Housing Affordability from Fed Governor Christopher J. Waller can be found here.

Pending Home Sales (SA, % chg) Feb Jan Dec Feb Y/Y % 2021 2020 2019
Total -4.1 -5.8 -2.3 -5.4 2.7 6.7 0.8
   Northeast 1.9 -12.1 -1.3 -9.2 1.2 2.4 0.5
   Midwest -6.0 -4.4 -2.5 -5.2 2.2 7.5 -0.5
   South -4.4 -7.3 -0.3 -4.3 4.1 8.3 1.6
   West -5.4 1.4 -7.6 -5.3 1.7 5.5 0.8
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