Pending home sales grew 2.0% month over month in February, though they were still down 3.6% from a year ago, according to a report from the National Association of Realtors (NAR).
The February sales numbers show signs of improvement following January’s report when pending home sales hit an all-time low.
“Despite the modest monthly increase, contract signings remain well below normal historical levels,” said NAR Chief Economist Lawrence Yun in a press release. “A meaningful decline in mortgage rates would help both demand and supply — demand by boosting affordability, and supply by lessening the power of the mortgage rate lock-in effect.”
NAR expects that mortgage rates will average 6.4% in 2025 and 6.1% in 2026. The average 30-year fixed-rate mortgage currently stands at 6.65%, according to data released Thursday by Freddie Mac.
The South region saw the biggest monthly increase in pending home sales, per the NAR report, rising 6.2%. Pending sales in the Midwest ticked up 0.7% month over month, while the West and Northeast had declines of 3.0% and 0.9%, respectively.
Sam Williamson, a senior economist for First American Financial Corp., said in a statement that the South has “benefited from new residential construction, which has boosted supply and improved affordability.” He added that “more listings are showing price reductions, and homes are lingering longer on the market, signaling potential respite for buyers even as mortgage rates hold steady.”
NAR’s latest economic forecast predicts that existing home sales will increase by 6% in 2025 and 11% in 2026. The association expects that new homes sales will rise 10% in 2025 and an additional 5% in 2026, driven by robust inventory.
NAR forecasts that home prices will grow at a lower rate than in recent years, projecting a 3% increase in the national median home price in 2025 and a 4% gain in 2026. By comparison, the median home price rose by 49.9% from 2019 to 2024, according to NAR.
“Home price growth will moderate due to more supply coming onto the market,” Yun stated. “Having income and wages rise faster than home prices are welcome to improve affordability.”
