Pending Home Sales Rise 2.0% in February; NAR Projects Stronger Housing Market in 2025
By James Hyerczyk | Published: Mar 27, 2025
Key Points
- Pending home sales rose 2.0% in February, indicating a slight recovery.
- The South experienced a remarkable increase of 6.2% in home sales.
- The Pending Home Sales Index (PHSI) is at 72.0, still significantly below the normal baseline of 100.
- NAR predicts mortgage rates to average around 6.4% in 2025, with a 6% increase in existing-home sales expected.
Pending Home Sales Rebound Modestly in February
According to the National Association of REALTORS® (NAR), pending home sales showed a modest gain of 2.0% month-over-month in February. This rise signals a modest recovery in contract signings, although it still lags behind historical norms due to persistently high mortgage rates.
Regional Divergence Highlights Market Pressure
The increase in pending home sales was not uniform across the country. The South was the standout region, experiencing a significant 6.2% increase, whereas the Midwest only saw a slight bump of 0.7%. The Northeast and West regions experienced declines of 0.9% and 3.0%, respectively. Year-over-year, all regions noted a decrease in contract signings, illustrating ongoing challenges in the housing market.
Mortgage Rates Remain a Key Constraint
NAR’s Chief Economist Lawrence Yun highlighted that the high mortgage rates are a substantial deterrent to market progress. Despite improvements, contract signings remain significantly below historical averages. Should mortgage rates decline, it may alleviate affordability concerns and encourage existing homeowners to list their properties for sale.
Market Forecast: Neutral-to-Bullish Outlook
The data for February signals stabilization in the housing market, but ongoing high borrowing costs may keep recovery slow. The strong performance in the South combined with improved inventory levels for new homes presents an optimistic outlook. If mortgage rates ease in line with the Federal Reserve's expectations, a modest uptick in housing activities could occur.
Summary & Opinion
While February’s pending home sales data presents a glimmer of hope, the overarching reality is that the road to a robust housing market remains fraught with hurdles. The anticipated stabilization is beneficial, yet without intervention in mortgage rates and continued support, the true market recovery may be more sluggish than expected.
