More people signed contracts to buy homes in February
More Americans signed contracts to buy homes in February, but sales were uneven across the country and not enough to signal a rebound in the housing market.
Sales agreements for homes rose 2.1 percent last month to a reading of 90.8, according to the National Association of Realtors’ pending-home-sales index released Monday. Sales rose in every region but the Northeast.
Signings were 19.6 percent above June’s index reading, the low point since the housing bust. Still, the index is below 100, which is considered a healthy level. The last time it reached that point was in April, the final month people could qualify for a home-buying tax credit.
Contract signings usually are a good indicator of where the housing market is heading. That’s because there’s usually a one- to two-month lag between a sales contract and a completed deal.
But the Realtors group also noted “a measurable level of contract cancellations” that also occurred in February. Many buyers canceled after appraisals showed the properties were valued much lower than their initial bids.
A sale is not final until a mortgage is closed.
“Therefore, the latest pickup in pending home sales and mortgage applications might not necessarily end up in a measurable pickup in mortgage closings and translate into an increase in existing- home sales,” said Yelena Shulyatyeva, an analyst at BNP Paribas.
The pace of sales varied from region to region. Signings fell 10.9 percent in the Northeast. They rose 2.7 percent in the South, 4 percent in Midwest and 7 percent in the West.
High unemployment, strict lending standards and a record number of foreclosures are deterring would-be buyers, who fear home prices haven’t hit bottom.