Fewer Americans signed contracts to purchase previously owned homes in February as limited inventory and access to credit held back a more robust recovery in housing.
The index of pending home sales fell 0.4% to 104.8, the second-highest level since April 2010, after a revised 3.8 percent increase the prior month, the National Association of Realtors reported today in Washington. The median forecast in a Bloomberg survey called for a 0.3% drop.
A smaller number of properties for sale may be hindering buyers with access to credit, while others with limited cash for a down payment are finding it difficult to take advantage of historically low interest rates. At the same time, a pickup in property values may encourage more people to list their homes as the spring selling season gets under way.
“Lending is excessively tight and continues to be,” Benjamin Ayers, an economist with Nationwide Mutual Insurance Co. in Columbus, Ohio, said before the report. “It’s limiting the expectations for growth.”
Estimates of 37 economists in the Bloomberg survey ranged from a drop of 3% to an increase 4%. The Realtors’ group revised January’s data from a previously reported increase of 4.5%.
Stocks fell after the Standard & Poor’s 500 Index approached a record high yesterday. The S&P 500 dropped 0.6% to 1,554.75 at 10:07 a.m. in New York.
Two of four regions saw a decrease in February pending home sales, today’s report showed, led by a 2.5% drop in the Northeast. Pending sales climbed 0.4% in the Midwest and 0.1% in the West.
Compared with a year ago, contract signings rose 5% following a 9.6% gain in the 12 months ended in January.
Pending home sales are considered a leading indicator because they track contract signings in advance of actual transactions, which are tabulated a month or two later. Existing home sales made up about 93% of the housing market last year.
Previously owned properties rose in February to the highest level in more than three years, the Realtors group reported on March 21. Sales climbed 0.8% to a 4.98 million annualized rate, the fastest since November 2009.