Partly reflecting strong growth in the Midwest, the National Association of Realtors released a report on Monday showing a bigger than expected increase in U.S. pending home sales in the month of February.
NAR said its pending home sales index climbed 3.5 percent to 109.1 in February from a downwardly revised 105.4 in January. Economists had expected the index to increase by about 1.5 percent.
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.
The index was up 0.7 percent compared to the same month a year ago, reflecting the eighteenth straight month of year-over-year growth.
However, NAR noted that the annual growth reported for February was the smallest seen during the recent streak.
Lawrence Yun, NAR chief economist, said, "After some volatility this winter, the latest data is encouraging in that a decent number of buyers signed contracts last month, lured by mortgage rates dipping to their lowest levels in nearly a year and a modest, seasonal uptick in inventory."
"Looking ahead, the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what's being scooped up by a growing pool of buyers," he added. "Without adequate supply, sales will likely plateau."
The bigger than expected increase by the pending home sales index was partly due to a jump in pending sales in the Midwest, which shot up by 11.4 percent.
Pending sales in the South also climbed by 2.1 percent and pending sales in the West rose by 0.7 percent, while pending sales in the Northeast edged down by 0.2 percent.
NAR said existing homes sales are forecast to be around 5.38 million this year, reflecting an increase of 2.4 percent from 2015.
The national median existing home price for this year is expected to increase between 4 and 5 percent, the group added.
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