Pending home sales in the United States saw a modest increase of 2.0% in February, according to the latest report from the National Association of Realtors® (NAR). While this indicates some positive movement in the housing market, overall contract signings remain below historical averages.
The February data revealed regional variations. The Northeast and West experienced month-over-month declines, with the West seeing a more significant drop. Conversely, the Midwest and South saw increases, with the South leading the way. Year-over-year, however, all four U.S. regions reported decreases in contract signings, with the Midwest showing the steepest decline.
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The Pending Home Sales Index (PHSI), a leading indicator of home sales based on contract signings, reached 72.0 in February. Despite the monthly increase, this figure is still 3.6% lower than February 2024. An index of 100 represents the level of contract activity in 2001.
“Despite the modest monthly increase, contract signings remain well below normal historical levels,” said NAR Chief Economist Lawrence Yun. “A meaningful decline in mortgage rates would help both demand and supply – demand by boosting affordability, and supply by lessening the power of the mortgage rate lock-in effect.”
NAR’s Economic Forecast for 2025 and 2026
Looking ahead, NAR predicts a gradual improvement in the housing market, driven by moderately lower mortgage rates.
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“Considering the Federal Reserve’s recent forecast for slower economic growth, we expect mortgage rates to slide moderately lower,” Yun stated. “But the current high national debt will prevent mortgage rates from falling drastically – and certainly not to the 4%-to-5% range seen during President Trump’s first term.”
NAR forecasts that mortgage rates will average 6.4% in 2025 and 6.1% in 2026. The association anticipates existing-home sales will increase by 6% in 2025 and accelerate by another 11% in 2026. New-home sales are expected to rise by 10% in 2025 and 5% in 2026, due to ample inventory. The national median home price is projected to increase by 3% in 2025 and 4% in 2026.
“Home price growth will moderate due to more supply coming onto the market,” Yun added. “Having income and wages rise faster than home prices are welcome to improve affordability.”
Regional Breakdown of Pending Home Sales:
- Northeast: PHSI fell 0.9% to 62.8, down 2.5% year-over-year.
- Midwest: PHSI increased 0.7% to 73.3, down 4.7% year-over-year.
- South: PHSI surged 6.2% to 86.0, down 3.4% year-over-year.
- West: PHSI declined 3.0% to 55.9, down 3.5% year-over-year.
The NAR, America’s largest trade association, represents professionals in all aspects of residential and commercial real estate.
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