Pending home sales rise in February, mortgage rates jump
“For Sale” sign in front of a house on February 22, 2023 in Miami, Florida.
Joe Radle | Getty Images
Higher mortgage rates somewhat dampened the pace of housing recovery in February.
After a sharp rise in January, pending home sales rose just 0.8% on a monthly basis, according to the National Association of Realtors. Sales were 21.1% lower than in February last year. Pending sales are based on signed contracts within a month.
Mortgage rates rose sharply in February after falling sharply in January. The average rate on the popular 30-year fixed mortgage was around 6% in early February and just over 7% at the end of the month. Mortgage News Daily. This gave homebuyers significantly less purchasing power.
In the regional context, sales grew from month to month in all regions, except for the West, where they fell by 2.4%. This is probably due to the fact that the West is the most expensive region to live in, and buyers there are the most drawn to afford a home. Any jump in mortgage rates will have a huge effect there.
“The accessible regions of the US — the Midwest and the South — are leading the recovery,” Yun added. “Mortgage rates have improved in recent weeks after the federal government guaranteed the status of most mortgages amid financial market uncertainty,” real estate agency chief economist Lawrence Yun said in a press release. “While commercial mortgages may become increasingly difficult to access, residential mortgages are expected to become more affordable.”
House prices have dropped significantly since last summer, but by historical standards, housing is still expensive. The fall in prices could also stop in January due to a sharp increase in consumer demand. Real estate agents have unconfirmedly reported new bidding wars in January, given that offers are still very limited.