March 24, 2019

Pending home sales increase for second straight month

Continued drops in mortgage rates are paving the way toward a robust spring home buying and selling season.

New approved contracts at the end of February were down from January’s spike while the number of active pending sales awaiting closing were at a four-year high.

There were 665 new approved contracts for single-family and townhome/condo resales in the 11-counties monitored by the Northeast Tennessee Association of Realtors (NETAR) at the end of February.  A decrease of 43 from January and 77 more than February last year. The preliminary total number of approved contracts moving toward closing was 1,060. That total is up 179 from January and 310 more than February last year. Total active contracts include new contracts from February and those from January that had not closed.

Pending sales are forward-looking indicators based on new contract signings reported by Realtor Property Resource (RPR).

“Lower interest rates are welcome news in this era of tight inventories,” NETAR President Karen Randolph said. “Not only do they move sales - they make buying a home more affordable.” 

The 30-year fixed rate dropped to 4.28 percent for the week ending Feb. 23. Another drop is likely this week on the heels of the Fed’s decision to not increase its benchmark rate – a signal that it would not take rates higher this year over concerns about a slowing global economy, according to NETAR’s market research analyst Don Fenley. The Fed does not set mortgage rates, but its decisions influence them. The March 21 Freddie Mac summary of 4.28% is the lowest since Feb. 1, 2018, when it was 4.22%.

A home sale is listed as pending when a contract has been signed, but the transaction has not closed. Pending sales usually move to closings in 30 to 45 days. But not all contracts in the pipeline will move to closing. It is normal for as many as 5 percent to fall through and the fall-through rate has been higher recently due to the number of contingency contracts.

NETAR is the voice for real estate in Northeast Tennessee - is the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,200 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, monthly Trends Reports and the regional market analytics can be found on the NETAR websites at .