Pending home sales rebound after falling in January

The number of U.S. second-hand homes for sale rebounded last month after declining at the beginning of the year, further evidence that the real estate market is gradually improving.

The National Association of Realtors’ contract signing index rose 1.6% to 75.6. The median forecast among economists surveyed by Bloomberg was for a 1.5% rise.

“While the modest sales growth may not spark excitement, it shows slow but steady progress since the lows late last year,” NAR Chief Economist Lawrence Yun said in a statement Thursday.

The country’s property market has been trending generally upward in recent months, signaling a growing acceptance of borrowing costs, which will remain double their levels by the end of 2021 but are expected to fall at some point. A recent report suggested that listings may have started to decline, with inventory reaching the highest level since 2020 in February.

After raising interest rates 11 times since the spring of 2022, many in the real estate industry are waiting for the Federal Reserve to cut interest rates. However, some Fed officials have expressed a willingness to keep interest rates higher for longer to further reduce inflation. Atlanta Fed President Raphael Bostic reiterated this week that he expects only one rate cut this year, and Fed Governor Christopher Waller said there is no rush to cut rates.

The Pending Home Sales Report is a leading indicator of existing home sales since homes typically go into contract a month or two before they go on sale.

The Midwest was the main driver of pending sales growth, with a 10.6% increase. Contract signings in the South, the largest U.S. real estate market, edged up 1.1%. There was little change in the Northeast and a decrease in the West.

“High-cost areas in the Northeast and West have experienced a pullback due to affordability challenges,” Yun said.

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