February pending home sales flattened with limited buyer choices, according to new data from the National Association of Realtors (NAR).
NAR's Pending Home Sales Index (PHSI) slipped 0.4% to 104.8 in February from a downwardly revised 105.2 in January. However, NAR notes the PHSI is 8.4% higher than February 2012, when it was 96.6. Before January, the last time the index showed a higher reading was in April 2010, when it was 110.9, shortly before the deadline for the home buyer tax credit.
The PHSI in the Northeast declined 2.5% to 82.8 in February but is 6.8% above February 2012. In the Midwest, the index rose 0.4% to 103.6 in February and is 13.2% higher than a year ago.Â
Pending home sales in the South slipped 0.3% to an index of 118.8 in February but are 12.1% above February 2012. In the West, the index increased 0.1% in February to 101.4 but is 0.8% below a year ago.
‘Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels,’ says Lawrence Yun, NAR's chief economist. ‘Most local home builders are small businesses and simply don't have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market.’
Yun projects existing home sales to rise about 7% this year to approximately 5 million sales, which is near the current level of activity.
‘The volume of home sales appears to be leveling off with the constrained inventory conditions, and the leveling of the index means little change is likely in the pace of sales over the next couple months,’ he says.