NAR: Pending home sales lag 2025 despite February uptick

Pending home sales picked up slightly in February as affordability improved, but they remain below 2025 levels, according to data released Tuesday by the National Association of Realtors (NAR).

The trade group’s Pending Home Sales Index rose 1.8% from January to a reading of 72.1 in February. This is 0.8% below the index’s February 2025 reading.

An index reading of 100 is equal to the level of contract activity in 2001.

“The slight gain in pending contracts appears to be driven by improved affordability conditions. However, those conditions could reverse if higher oil prices lead to an uptick in mortgage rates,” Lawrence Yun, NAR’s chief economist said in a statement.

Lisa Sturtevant, the chief economist at Bright MLS, attributed some of the annual decline in pending home sales to the current macroeconomic conditions.

“Even as mortgage rates dipped below 6% last month, ongoing economic uncertainty, affordability constraints and a dearth of new listings kept many home shoppers on the sidelines,” she said in a statement. “When 2026 started, there was a lot of optimism for a strong spring housing market. At this point, the start of the spring homebuying season is delayed, with sellers holding off on putting their homes on the market and buyers questioning whether it is the right time for them to buy.”

Sturtevant added that if the conflict with Iran is prolonged, the spring housing market may not be as robust as economists were initially predicting.

Pending home sales down in the Northeast

Regionally, pending home sales rose month-over-month in all regions except for the Northeast, which recorded a 3.6% monthly decline to an index value of 55.7. In contrast, pending home sales were up 4.6% in the Midwest (74.3), 2.7% in the South (87.5) and 0.9% in the West (58.4). Year-over-year, pending home sales were down in the Northeast (-12.1%) and Midwest (-0.1%), but up in the South (1.2%) and West (3.2%).

“The Midwest — the most affordable region of the country — was the strongest performer in February. But the Northeast was held back by a combination of higher home prices and a shortage of supply,” Yun added.

Sturtevant also noted that winter weather in the Northeast may also have contributed to the steep annual decline in pending home sales.

Of the top-50 largest metro areas, the San Diego-Chula Vista-Carlsbad, Calif. recorded the largest annual increase in pending home sales, jumping 13.5%, followed by Jacksonville, Fla. (12.1%); San Jose-Sunnyvale-Santa Clara, Calif. (10.6%); Denver-Aurora-Centennial, Colo. (10.5); and Miami-Fort Lauderdale-West Palm Beach, Fla. (1.0%).

Looking ahead, Yun feels there is a sizable amount of pent-up buyer demand waiting to be unlocked, but economic uncertainty may impact the enthusiasm of some potential buyers.

“For first-time homebuyers, purchasing a home is not a snap decision,” Yun added. “It takes time to build credit, save for a down payment and fulfill existing rental lease agreements. Although job gains have been sluggish in recent months, there are still 6 million more jobs in the country than in the pre-COVID period.”