by Year-over-year contract signings fall 3.6% in February, with activity declining in all 4 regions of the US
WASHINGTON, D.C. — The National Association of Realtors said that monthly pending home sales improved 2% in February, with gains in the Midwest and South and losses in the Northeast and West.
The NAR describes the Pending Home Sales Index (PHSI) as a forward-looking indicator of home sales based on contract signings. With a benchmark of 100 that equals the level of contract activity in 2001, this indicator rose to 72 in February.
However, year-over-year pending home sales declined 3.6% compared with February 2024, with contract signings falling in all four regions of the U.S. The Midwest had the largest reduction, the NAR reported.
“Despite the modest monthly increase, contract signings remain well below normal historical levels,” said NAR Chief Economist Lawrence Yun. “A meaningful decline in mortgage rates would help both demand and supply – demand by boosting affordability, and supply by lessening the power of the mortgage rate lock-in effect.”
By region, the PHSI activity was as follows:
+ The Northeast declined .9% from the prior month to 62.8, which also was down 2.5% from February 2024.
+ The Midwest rose .7% from January to 73.3% in February, which was down 4.7% from February 2024.
+ In the South, the index rose 6.2% from January to 86 in February, which was down 3.4% from February 2024
+ In the West, the index declined 3% from January to 55.9, which also was down 3.5% from February 2024.
In its quarterly economic forecast, the NAR estimated that mortgage rates will average 6.4% in 2025 and 6.1% in 2026. It also estimates that existing home sales will rise 6% in 2025 and rise by another 11% in 2026.
“Considering the Federal Reserve’s recent forecast for slower economic growth, we expect mortgage rates to slide moderately lower,” Yun said. “But the current high national debt will prevent mortgage rates from falling drastically – and certainly not to the 4%-to-5% range seen during President Trump’s first term.”
It also said that with plenty of inventory available, it expects the new home sales market will rise 10% in 2025 and another 5% in 2026. It also predicts that the national median home price will rise by 3% in 2025 and by 4% in 2026.
“Home price growth will moderate due to more supply coming onto the market,” Yun added. “Having income and wages rise faster than home prices are welcome to improve affordability.”
