LITTLE ROCK — The number of Americans signing contracts to buy previously owned homes held in February near an almost two-year high, a sign that the real estate market may be stabilizing.
The index of pending home purchases fell 0.5 percent to 96.5 after a 2-percent increase the prior month, the National Association of Realtors said Monday. January’s reading of 97 was the highest since April 2010. A reading of 100 or higher is considered healthy.
The median forecast of 41 economists surveyed by Bloomberg News called for a 1-percent rise.
Residential real estate is recovering even amid the threat of more foreclosures, which are weighing on property values. A pickup in hiring, growing incomes and mortgage rates near a record low are making houses more affordable, driving demand.
“Demand is gradually improving,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York.“It’s really a problem of oversupply in the housing market. A lot will depend on how fast the foreclosures are being processed.”
Contract signings typically indicate where the housing market is headed. There’s a one- to two-month lag between a signed contract and a completed deal. A sale isn’t final until a mortgage is closed.
Pending home sales are considered a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a contract closes, and made up about 93 percent of the housing market last year.
Compared with a year earlier, February pending home sales climbed 14 percent.
Three of four regions saw a decrease in pending home sales, Monday’s report showed. That included a 3-percent decline in the South and a 2.6-percent drop in the West. The Midwest climbed 6.5 percent.
Sales of previously owned houses held in February near an almost two-year high, the real-estate agents’ group reported last week. Purchases dropped 0.9 percent to a 4.59 million annual rate from a revised 4.63 million pace in January that was faster than previously estimated and the highest since May 2010.
Even with the decline last month, January and February sales of existing homes marked the strongest start to a year since 2007.
“The spring home buying season looks bright because of an elevated level of contract offers so far this year,” Lawrence Yun, the association’s chief economist, said in a statement Monday. “If activity is sustained near present levels, existing home sales will see their best performance in five years.”
Home foreclosures remain a concern for builders. Filings fell 8 percent in February, the smallest year-over-year decrease since October 2010, as lenders began working through a backlog of seized properties, Realty Trac Inc. said this month.
“February’s numbers point to a gradually rising foreclosure tide,” Brandon Moore, Realty Trac’s chief executive officer, said in a statement. “That should result in more states posting annual increases in the coming months.”Information for this article was contributed by Derek Kravitz of The Associated Press.
Business, Pages 21 on 03/27/2012