Americans signed fewer contracts to buy previously owned homes in February, indicating a pause in momentum for an industry that is helping power the economy.
An index of pending home sales fell 0.4 percent to 104.8, the second-highest level since April 2010, after a revised 3.8 percent increase the prior month, the National Association of Realtors reported last week in Washington. Contract signings, unadjusted for seasonal variations, increased 5 percent from February 2012.
Tighter mortgage-lending criteria have made it tougher for prospective homeowners to take advantage of historically low interest rates, while fewer properties for sale hinder those with access to credit. Rising property values may encourage more people to list homes as the spring selling season gets under way, giving the housing market another leg up.
“This year housing will remain a bright spot in the economy,” said Yelena Shulyatyeva, a U.S. economist in New York at BNP Paribas and the top forecaster of pending home sales over the past two years, according to data compiled by Bloomberg. Low inventory is a “temporary phenomenon. As prices rise a little bit more, we’ll see more supply and market forces will fix the situation.”
U.S. pending home sales are considered a leading indicator because they track contract signings in advance of actual closings, which occur a month or two later. Existing-home sales made up about 93 percent of the housing market last year.
Sales of previously owned properties rose in February to the highest level in more than three years, the Realtors group reported on March 21. Sales climbed 0.8 percent to a 4.98 million annualized rate, the fastest since November 2009.
“I’ve never seen a market like this, and I’ve been doing this for 19 years,” said Jenny Ames, a real estate agent at Coldwell Banker in Chicago. Ames, who sells properties on the city’s north side that range from $200,000 to $5 million, said she had about $130 million in sales last year. “The top agents in the city, most of us, doubled our sales in 2012 compared to 2011. This year, we’re again way ahead of where we were the year before.”