W
ASHINGTON (March 27, 2025) - The National Association of REALTORS reported a 2.0% increase in pending home sales for February, with the Midwest and South experiencing gains while the Northeast and West saw declines. Year-over-year, contract signings dropped across all four U.S. regions, with the largest decline in the Midwest.
The Pending Home Sales Index (PHSI) rose to 72.0 in February, a 2.0% increase from January's level. However, year-over-year pending transactions declined by 3.6%. According to NAR Chief Economist Lawrence Yun, despite the modest monthly gain, contract signings remain below normal historical levels.
Yun attributed this to high mortgage rates and suggested that a decline in rates would boost demand and supply. He forecasted that mortgage rates will average 6.4% in 2025 and 6.1% in 2026, with existing-home sales rising by 6% in 2025 and accelerating another 11% in 2026.
The new-home sales market is expected to rise by 10% in 2025 and another 5% in 2026 due to plentiful inventory. Yun also predicted that the national median home price will increase by 3% in 2025 and 4% in 2026, with home price growth moderating as more supply comes onto the market.
Regional Breakdown:
* The Northeast PHSI fell 0.9% from last month to 62.8, down 2.5% from February 2024.
* The Midwest index inched up 0.7% to 73.3 in February, down 4.7% from the previous year.
* The South PHSI jumped 6.2% to 86.0 in February, down 3.4% from a year ago.
* The West index contracted by 3.0% from the prior month to 55.9, down 3.5% from February 2024.
NAR forecasts that mortgage rates will slide moderately lower due to slower economic growth, but not drastically low. The association expects existing-home sales to rise in 2025 and 2026, with new-home sales also increasing due to plentiful inventory.
