2019.03.2810:18:00UTC+00U.S. Pending Home Sales Unexpectedly Slump 1.0% In February

Pending home sales in the U.S. unexpectedly decreased in the month of February, according to a report released by the National Association of Realtors on Thursday.

NAR said its pending home sales index slumped by 1.0 percent to 101.9 in February after soaring by 4.3 percent to a downwardly revised 102.9 in January.

Economists had expected pending home sales to climb by 0.7 percent compared to the 4.6 percent spike originally reported for the previous month.

Compared to the same month a year ago, pending home sales were down by 4.9 percent in February, reflecting the fourteenth straight month of annual decreases.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

"In January, pending contracts were up close to 5 percent, so this month's 1 percent drop is not a significant concern," said NAR chief economist Lawrence Yun.

He added, "As a whole, these numbers indicate that a cyclical low in sales is in the past but activity is not matching the frenzied pace of last spring."

The unexpected pullback in pending home sales was partly due to a substantial decrease in the Midwest, where pending sales plummeted by 7.2 percent.

Pending home sales also fell by 0.8 percent in Northeast but rose by 0.5 percent in the West and surged up by 1.7 percent in the South.

Looking ahead, Yun expects existing home sales to decrease by 0.7 percent to 5.30 million in 2019, while he expects the national median existing home price to jump around 2.7 percent. Existing sales and home prices are both expected to rise by 3 percent in 2020

Yun added that he does not anticipate any interest rate increases from the Federal Reserve this year, in line with the latest forecast from the central bank.

"If there is a change at all, I would say the Fed will lower interest rates in 2019 or 2020. That would stimulate the economy and the housing market," Yun said.

He added, "But the expectation is no change at all in the current monetary policy, which will help mortgage rates stay at attractive levels."