US Pending Home Sales (M/M) Feb: -10.6% (est -3.0%; prev R -2.4%) - Weather and inventories drag on pending home sales (as it did with other Feb reports) - more here

US Pending Home Sales (M/M) Feb: -10.6% (est -3.0%; prev R -2.4%) Pending Home Sales NSA (Y/Y) Feb: -2.7% (est 6.5%; prev R 8.8%)




Pending home sales (which are contract signings not actual transactions) plunged in February down in all regions bringing it to pre-pandemic levels (and down 0.5% y/y).  Weather and inventory were IMO the predominant issues so I expect a bounce back in March due to the former being much better, but inventory will remain a challenge.  It should be noted also that the West saw a big fall (although less than the other regions) where weather was not much of an issue.  There it is more of an inventory and affordability (and perhaps desirability) story it would seem.  Here is some commentary from the report.

"The demand for a home purchase is widespread, multiple offers are prevalent, and days-on-market are swift but contracts are not clicking due to record-low inventory," said Lawrence Yun, NAR's chief economist.

"Only the upper-end market is experiencing more activity because of reasonable supply," he continued. "Demand, interestingly, does not yet appear to be impacted by recent modest rises in mortgage rates."

According to Yun, even with rising mortgage costs, rates are expected to remain relatively low at no more than 3.5% in 2021. He says the rates are still advantageous to both prospective buyers and to current homeowners who are contemplating refinancing.

Nationally, homes priced at above $250,000 have largely been driving home sales for the last several months. However, Yun indicates that even homes priced above $500,000 to less than $1 million are subject to the same low-inventory dilemma.

"Potential buyers may have to enlarge their geographic search areas, given the current tight market," Yun said. "If there were a larger pool of inventory to select from – ideally a five- or a six-month supply – then more buyers would be able to purchase properties at an affordable price."

In terms of regions, 

The Northeast PHSI fell 9.2% to 92.3 in February, a 3.9% dip from a year ago. In the Midwest, the index dropped 9.5% to 102.4 last month, down 6.1% from February 2020.

The South declined 13.0% to an index of 133.2 in February, up 2.9% from February 2020. The index in the West fell 7.4% in February to 96.9, up 1.9% from a year prior.

To see more content, including summaries of some of today's economic reports and my nightly Summary go to https://sethiassociates.blogspot.com


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