Pending Home Sales Dip 0.5%
Business + Economy

Pending Home Sales Dip 0.5%

Contracts to purchase previously owned homes unexpectedly fell in February, suggesting a further pullback in sales as the housing market struggles to regain its footing.

The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed in February, slipped 0.5 percent to 96.5, also implying a weak start to the spring selling season

Economists polled by Reuters had expected signed contracts, which lead existing home sales by a month or two, to advance 1.0 percent after a 2.0 percent rise the prior month. Contracts signed were up 9.2 percent in the 12 months to February.

"This suggests a pretty weak start to the spring selling season. The warm weather in the winter seems to have pulled forward sales," said Jacob Oubina, a senior U.S. economist at RBC Capital Markets in New York.

U.S. stocks held steady at higher levels after the data, while Treasury debt prices were lower.

Data last week showed sales of previously owned homes fell in February and the decline in signed contracts suggests home purchases could be weak again in March.

Other reports last week also showed declines in home building activity and new home sales in February. Despite the early signs of fatigue, both economists and realtors remain optimistic the housing market will recover this year.

"Indeed, February has been a bit of a pothole for the housing market. It was evident in housing starts, new home sales, and existing home sales," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

"But with affordability high and job creation improving, there is still much opportunity for improvement in the housing sector."

Contracts fell in three of the four regions last month, but jumped 6.5 percent in the Midwest.