Buyers are rushing into the housing market in anticipation of higher interest rates
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Some prospective homebuyers are speeding up the process in anticipation of higher interest rates, according to the National Association of Realtors.
Pending home sales jumped 5.5% in February, the most since April 2010, according to the National Association of Realtors. Economists had forecast that pending sales of condos, coops, and single-family homes increased by 2.5% in February, according to Bloomberg.
Sales fell 2.8% in January.
"The stock market's continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year," said Lawrence Yun, the NAR's chief economist, in the release. The Federal Reserve increased its benchmark rate earlier in March and signaled it could do so at least two more times this year.
Housing supply — especially in the lower-to-mid price range — still isn't keeping up with the level of demand as the market enters the busy spring season, Yun said.
"We expect the housing sector to remain on firm footing despite the increase in interest rates, due to the health of the labor market and household balance sheets, and the easing of lending standards for residential mortgages," Deutsche Bank economists said in a note.
Pending sales are based on signed contracts that have not yet closed, so they are a gauge of future sales.