WASHINGTON/NEW YORK: Surprisingly upbeat data on the US housing market on Monday suggests home sales will tick higher going into the traditionally strong spring season.
Pending sales of previously owned US homes unexpectedly rose in February, a welcome sign after data last week showed sales of new and previously owned homes slumped last month.
The data leads existing home sales by a month or two and suggests some of the recent weakness was due to unusually severe winter weather. Nonetheless, housing remains at low levels and economists expect that will continue.
The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in February, increased 2.1 percent to 90.8 after declining for the past two months.
Economists had expected the index to fall 1.0 percent after a previously reported 2.8 percent decline. Compared to February last year, the index was down 8.2 percent.
“What this tells me is the housing market is still groping for stabilisation, but certainly it made some progress in this month,” said Anthony Chan, chief economist at J.P. Morgan Private Wealth Management in New York.
“This figure would suggest as you are starting to approach the peak season that the market is getting off to a favourable start.”
Ian Shepherdson, chief US economist at High Frequency Economics, estimated that the increase in pending sales suggests existing home sales for March will rise to an annual rate of about 5 million units from February’s 4.88 million unit pace. Sales of previously owned homes have declined 9.6 percent in February.
An oversupply of homes exacerbated by an increasing flood of properties falling into foreclosure is frustrating recovery in the housing market, whose collapse triggered the worst US recession since the 1930s.