The National Association of Realtors (NAR) seasonally adjusted pending home sales index improved. Our analysis disagrees – and further pending home sales are in contraction year-over-year. The quote of the day from this NAR release:

.. weakening affordability and not enough inventory on the market restricted overall activity compared to a year ago …

Analyst Opinion of Pending Home Sales

The rolling averages are in negative territory. The data is very noisy and must be averaged to make sense of the situation. There is no signs of a surge in home sales, although the trends continue to be downward.

Pending home sales are based on contract signings, and existing home sales are based on the execution of the contract (contract closing).

The NAR reported:

Econintersect‘s evaluation using unadjusted data:

From Lawrence Yun , NAR chief economist:

…. the housing market has gotten off to an uneven start so far in 2018. Contract signings rebounded in most areas in February, but the gains were not large enough to keep up with last February’s level, which was the second highest in over a decade (112.1). The expanding economy and healthy job market are generating sizeable homebuyer demand, but the miniscule number of listings on the market and its adverse effect on affordability are squeezing buyers and suppressing overall activity.

Expect ongoing volatility in the Northeast region at least through March. Although pending sales there bounced back in February following January’s cold weather-related decline, the multiple winter storms over these last few weeks likely put a chill on contract signings once again this month.

Homeowners are already staying in their homes at an all-time high before selling, and any situation where they remain put even longer only exacerbates the nation’s inventory crunch. Even if new home construction starts picking up at a faster pace this year, as expected, existing sales will fail to break out if these record low supply levels do not recover enough to meet demand.