Pending home sales dropped for the fourth month in a row in February, down 4.1% from January and 5.4% YOY, the National Association of Realtors (NAR) reported.
NAR’s Pending Home Sales Index (PHSI), which measures home sales using contract signings, fell in three of the major regions. The Northeast was the only region that saw an increase from January.
All four regions saw year-over-year declines.
“Pending transactions diminished in February mainly due to the low number of homes for sale. Buyer demand is still intense, but it’s as simple as ‘one cannot buy what is not for sale,'” said Lawrence Yun, NAR’s chief economist.
The Northeast PHSI rose 1.9% to 85.0 in February, down 9.2% YOY. In the Midwest, the index fell 6.0% to 99.7 last month, down 5.2% YOY. An index of 100 is equal to the level of contract activity in 2001.
Contract signings in the South fell 4.4% to 127.2, down 4.3% YOY while the index in the West dropped 5.4% in February to 90.0, down 5.3% YOY.
Yun added that the market remains competitive but “fast-changing conditions” will force home sellers to switch strategies to attract buyers.
Rising mortgage rates and home price appreciation have pushed monthly mortgage payments up 28% YOY.
“The surge in home prices combined with rising mortgage rates can easily translate to another $200 to $300 in mortgage payments per month, which is a major strain for many families already on tight budgets,” Yun said.
NAR expects home sales to fall by 7% in 2022, with mortgage rates settling between 4.5% and 5%.