Pending Home Sales Fall 0.4% in February


Contracts to buy previously owned U.S. homes fell in February, held back by a shortage of properties, but there is little to suggest that the housing market recovery is stalling.

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The National Association of Realtors said on Wednesday its Pending Home Sales Index, based on contracts signed last month, slipped 0.4% to 104.8. Still, contracts last month remained at the second highest level in nearly three years.

Economists polled by Reuters had expected signed contracts, which become sales after a month or two, to dip 0.2% after a previously reported 4.5% jump in January.

The Realtors group blamed the pullback to a shortage of homes for sale. The supply squeeze is helping to push up home prices, putting a solid foundation under the housing recovery.

"Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50% from current levels,'' said NAR chief economist Lawrence Yun in a statement.

Data on Tuesday showed home prices in 20 metropolitan areas tracked by S&P/Case Shiller soared 8.1% in January from a year ago, the biggest rise since June 2006.

Pending home sales were up 8.4% compared to February last year. Home resale contracts were down in the Northeast and South. They increased in the Midwest and West.