The National Association of Realtors’ latest Pending Home Sales Index released late last week showed declines in pending home sales in the Northeast and South with modest increases in the Midwest and West. Pending sales were below a year ago across all regions.
The Pending Home Sales Index dipped 0.8% to 93.9 in February from a downwardly revised 94.7 in January. It was 10.5% below February 2013 when it was 104.9. The index is a highly watched indicator of the housing market because it tracks contract signings, which gives us a glimpse into home sales over the next month or two.
NAR’s economists say the slight change in contract signings in February implies the market is stabilizing.
If signed contracts are an indicator, it looks like sales in the Northeast will see the biggest declines this spring. The Pending Sales Index in that region fell 2.4% to 77.1 in February and was 7.4% below a year ago. Pending sales in the South fell 4% to 106.3 in February, and were 9.3% below a year ago.
Meanwhile, pending sales in the Midwest rose 2.8% to 95.3 in February, but were 8.5% lower than the same month in 2013. The index in the West climbed 2.3% in February to 86.1, but was 16.5% below the same month a year ago.
All in all, NAR forecasts total existing home sales to finish the year around 5 million in 2014, just below the 5.1 million in 2013. Housing starts, which indicate new construction, are projected to rise almost 19% and reach about 1.1 million this year.
As for values, the increase in construction should reduce some of the pressure on prices. NAR expects the national median existing-home price to climb 5.5-6% this year, compared with an 11.5% jump in 2013.
What we’re seeing now is a housing market that is stabilizing. Some markets will see slower growth this year than last, but overall we’ll see healthy movement in both sales and values.