ECM: US February Pending Home Sales Rise 5.5% To 10-Month High
US pending home sales rose sharply by 5.5% in February compared with expectations of a 2.4% monthly gain and following a 2.8% decline for January. The February data which gave a 2.6% annual increase was the strongest reading since April 2016 and the second highest reading since May 2006.
According to National Association of Realtors (NAR) chief economist Yun, â€˜buyers came back in force last month as a modest, seasonal uptick in listings was enough to fuel an increase in contract signings throughout the countryâ€™.
Sales in the Northeast rose 3.4% to give a 6.0% annual gain with sales in the South registering a 4.2% annual gain. Sales in the West and Midwest both recorded monthly increases, the latter registering a sharp 11.4% gain, although both regions still recorded a slight year-on-year decline in sales.
Housing trend have been mixed over the past month with a decline in existing home sales for February offset by stronger data for new homes sales.
Consumer confidence strengthened to the highest level in 16 years for March which should also have an increase in strengthening demand for housing, especially as the labour market remains strong. US bond yields have also declined over the past few weeks which will curb upward pressure on bond markets.
The Federal Reserve, however, increased interest rates at the March meeting with expectations that rates will continue to increase over the next few months and the Administration also suffered a setback on Healthcare which may have an impact in undermining wider confidence.
Affordability issues will also be important, especially with increases in house prices outpacing income gains and this is liable to be a crucial barrier to sales over the next few months, especially if mortgage rates start to climb again.
The dollar ticked higher after the data with USD/JPY at 110.90 from 110.80, although Treasuries were resilient with futures showing gains of close to 10 ticks on the day and equity indices were slightly lower.