The National Association of Realtors (NAR) released its Pending Home Sales Index for February 2017 on Wednesday. The Index showed pending home sales had jumped to their highest level in a year, and the second highest level in over a decade.
February’s index jumped 5.5 percent to 112.3, 2.6 percent higher than a year ago and the highest since April 2016. This is only slightly behind the highest level in May 2006, at 112.5.
"Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country," said NAR Chief Economist Lawrence Yun. "The stock market's continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year."
Yun continued to say that inventory problems will have a major effect on the market in the coming months, especially at the lower- and mid-market price range.
"The homes most buyers are in the market for are unfortunately the most difficult to find and ultimately buy," said Yun. "The country's healthy labor market is translating to greater job security, but affordability is not improving because home prices in some areas are still outpacing incomes by three times or more because of tight supply. How much new and existing inventory there is on the market this spring will determine if sales can reach their full potential and finally start reversing the nation's low homeownership rate."
NAR estimates that existing home sales are going to increase this year by 2.3 percent over last year, to 5.57 million over last year’s 5.45 million. Additionally, the median existing-home price this year is expected to increase around 4 percent.