In a grim sign for the housing market’s busiest season, pending home sales, which measure signed contracts on existing homes, fell 4.1% in February compared with January, according to the National Association of Realtors.
Sales were down 5.4% compared with February 2021. Analysts were expecting a slight gain. This is the fourth straight month of declines in pending sales, which are an indicator of future closings, one to two months out.
Since this count is based on signed contracts in February, when mortgage rates really started to take off, it is a strong indicator of how the market is reacting to the new rate environment, especially as it is entering the crucial spring season.
Rates began rising in January and continued sharply higher in February. The average rate on the 30-year fixed mortgage is now more than a full percentage point higher than it was one year ago.
Regionally, pending sales rose 1.9% month to month in the Northeast but were down 9.2% from a year ago. In the Midwest, sales decreased 6.0% for the month and were down 5.2% from February 2021. In the South, sales fell 4.4% monthly and 4.3% annually, and in the West they were down 5.4% for the month and 5.3% from a year ago.