April 1, 2018

Pending Home Sales Up As Market Enters Spring Season

Pending home sales were up in February as buyers shrugged off tight inventory, higher prices, and increasing mortgage rates.

The Northeast Tennessee Association of Realtors®' (NETAR) Pending Home Sales Index (PHSI), a forward-looking indicator based on new contract signing reported by Realtor Property Resource (RPR), grew 0.3% to 108.8 in February. That's a small month-over-month increase compared to January's 1.3% increase but a positive indicator as the market enters the spring season.

Aaron Taylor, NETAR president, said the housing market in the 11 counties monitored by NETAR's Trends Report is off to a strong 2018 start with year-to-date single-family resales and average sales price up 9.1% from the first two months of last year.  The PHSI points to that momentum continuing in the short-term, he added. The total new pending sales were 3.6% higher than February last year. That's the smallest increase in six months.

"New listings are almost equal to what they were during the first two months of last year, but the total listing inventory was down by 481 properties from February last year. Last year we had six months of inventory on the market," he added.

The Tri-Cities' regional economy continued expansion is keeping demand high, Taylor said. And although the job market's growth rate is slowing, private sector wages continue trending higher – especially in the three-county Johnson City Metropolitan Statistical (MSA). 

Contract signings traditionally increase with warmer weather and the first months of spring. So far, higher mortgage rates have incentivized buyers to lock in the best available rates before the next increase. And even with the likelihood that tight inventory frustrations will dampen demand, February's PHSI is 6.5% higher than last year, so the market has room to absorb some moderation.

NETAR's Pending Home Sales Index is a leading indicator for the housing sector based on pending sales of existing homes, condos and townhomes. A sale is listed as pending when the contract has been signed but the transaction has not closed. Sales are usually finalized in a month or two after signing.

NETAR – the voice for real estate in Northeast Tennessee - is the largest trade association in the 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.