Signed contracts to buy previously owned homes in the U.S. rose in February for the third straight month, the latest sign of recovery in the housing market.
The National Association of Realtors said on Wednesday that its pending home sales index climbed 0.8% over the course of February. Economists surveyed by Refinitiv expected contracts to decline by 2.3%.
“After nearly a year, the housing sector’s contraction is coming to an end,” said Lawrence Yun, the chief economist at NAR. “Existing-home sales, pending contracts and new-home construction pending contracts have turned the corner and climbed for the past three months.”
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For months, higher mortgage rates have dampened consumer demand and brought down home prices. But as rates have slowly fallen from a peak of 7%, the housing market has shown early signs of stirring back to life.
The rising in pending home sales came despite a sharp increase in mortgage rates last month: Freddie Mac reported that rates on the 30-year fixed mortgage rate from about 6.09% to 6.65% over the course of February.
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Rates have declined again in the wake of two bank failures after the federal regulators stepped in to shore up confidence within the financial system.
“The affordable U.S. regions – the Midwest and South – are leading the recovery,” Yun said. “Mortgage rates have improved in recent weeks after the federal government guaranteed the status of most mortgages amidst uncertainty in the financial market.”
However, the housing market has yet to climb out of a deep hole: Sales remain down about 21.1% compared to the same time one year ago.
The interest rate-sensitive housing market has borne the brunt of the Federal Reserve’s aggressive campaign to tighten policy and slow the economy.
Policymakers already lifted the benchmark federal funds rate nine consecutive times and have signaled that a tenth increase is on the table at their May meeting amid signs of underlying inflationary pressures within the economy.
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