The Pending Home Sales Index for February was above expectations, increasing 1.8% month over month to 72.1 versus the -0.6% consensus (-1% prior). The South region came in well above the national index at 87.5, followed by the Midwest at 74.3, the West at 58.4, and the Northeast at 55.7. The PHSI is a leading indicator of housing activity and measures housing contract activity, based on signed real estate contracts for existing single-family homes, condos and co-ops. Since a home goes under contract a month or two before it is sold, the PHSI generally leads existing home sales by a month or two.
The ABA Office of the Chief Economist believes while the index increased in February, the index level has not retraced December and January’s drop, with pending home sales remaining near historically low levels. Affordability challenges in the West and Northeast weigh on those indices relative to the more affordable South and Midwest regions. For banks, subdued turnover is likely to keep mortgage origination volumes muted in the near term, though some stabilization in pending sales could signal a floor forming in housing activity.
