Pending home sales in the Midwest soared in February, contributing to a rebound in the market for the month, data from the National Association of Realtors showed.
The region saw pending sales of properties—a leading signal of sales that is measured by contract signings—increase by almost 11 percent, the data released on March 28 showed. This was a significant improvement from the previous month, when it saw a decline of 7.6 percent.
The other region that saw improvement was the South, with a 1.1 percent pending-sales increase in February. Other parts of the country saw declines—with the West seeing a 6.5 percent decrease, while sales in the Northeast went down by 0.3 percent. Overall, the country saw a 1.6 percent increase in pending sales, after it fell by almost 5 percent in January.
“While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year,” Lawrence Yun, NAR’s chief economist, said in a statement. “Ongoing job gains are clearly increasing demand along with more inventory.”
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Yun also commented on the affordability issues in the West and the Northeast.
“The high-cost regions in the Northeast and West experienced pullbacks due to affordability challenges,” Yun said. “Home prices rising faster than income growth is not healthy and adds challenges for first-time buyers.”
Midwestern states tend to appear on lists of attractive places to live. A recent Rocket Homes ranking of the 15 cheapest places to buy a house included seven states in the Midwest: Kansas, Iowa, Illinois, Nebraska, Ohio, Missouri and Michigan.
Affordability may improve, Yun said, as the supply of homes for sale increases.
“There will be a steady rise in inventory from recent growth in home building,” he said in his statement. “Additionally, many sellers, who delayed listing in the past two years, will begin to put their homes on the market to move to a different home that better fits their new life circumstances—such as changes in family composition, jobs, commuting patterns and retirees wanting to be closer to their grandkids.”
Mortgage rates are still elevated and have been a key factor dissuading buyers from jumping into the market. For example, for the week ending March 22, applications for home loans dropped on the back of high rates.
“With rates still hovering around 7 percent, many prospective homebuyers are taking a ‘wait and see’ approach until affordability improves and more listings hit the market,” Mortgage Bankers Association’s president and CEO Bob Broeksmit said in a note shared with Newsweek. “MBA forecasts that mortgage rates will gradually move lower to around 6 percent by the end of the year, which should boost demand.”
Hannah Jones, the senior economic research analyst at Realtor.com, said the Midwest’s sales were 2.5 percent lower compared to the same time in 2023, while contract signings in the South were 8.5 percent below what they were a year ago. The Northeast was down 9 percent, and the West registered almost 8 percent declines on an annual basis.
“Both new home sales and pending home sales leveled off compared to December’s surge as mortgage rates picked up steam,” Jones said in a note shared with Newsweek.
She added, however, that in February, there was an increase of almost 21 percent in properties listed in the $200,000 to $350,000 range.
She added, “[It’s] offering options for buyers hoping to secure a home despite climbing mortgage rate.”
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.