Properly, the housing market gave the impression to be warming up in February, however it would possibly show to be non permanent.
The Nationwide Affiliation of Realtors reported that pending dwelling gross sales unexpectedly rose 1.8% month-over-month versus a median forecast of -1%.
So except for not being adverse MoM, in addition they beat expectations, which is clearly a optimistic.
Nevertheless, they had been nonetheless down 0.8% year-over-year and the outlook isn’t nice given mortgage charges hit 3.5-year lows in February.
As a result of as everyone knows, mortgage rates are a lot higher today than they had been only a few weeks in the past.
Pending Gross sales Went Constructive in February, However It May Not Final
Pending dwelling gross sales are a forward-looking indicator as they characterize signed contracts to buy a house.
Meaning a pending dwelling sale from February will seemingly shut in March or April as a result of it takes anywhere from 30-45 days to get a mortgage, if not longer.
So we’ll see a bump in current dwelling gross sales as soon as these get to the end line, assuming all of them do.
Nevertheless it doesn’t seem like the massive leap many had been anticipating this 12 months, together with NAR that projected a double-digit enhance in dwelling gross sales in comparison with 2025.
Given we had been solely in a position to muster a sub-2% enhance in pending gross sales throughout a month during which mortgage charges hit 3.5-year lows tells you every little thing you want to know.
It’s not precisely a blockbuster quantity, regardless of beating the very low bar set by economists for the month.
Nor does it paint a very vibrant image for the beginning of the spring dwelling shopping for season.
Assuming mortgage charges keep elevated from now by at the least summer season, you’ll be able to’t foresee gross sales getting significantly better.
The Mortgage Charge Spike Will Completely Sluggish Down House Gross sales
The continued battle within the Center East, which started on the very finish of February, has led to a giant spike in oil costs.
The knock-on impact has been markedly greater mortgage charges, as greater oil costs results in inflation, whether or not it’s elevated gasoline costs or greater enter prices for the manufacturing and transportation of products.
This led to a giant leap in 10-year bond yields, which had been sub-4% previous to the battle and seeking to drop much more.
That was the rationale the 30-year fastened mortgage was the bottom it had been since late summer season 2022.
And given mortgage charges had been nonetheless close to all-time lows in early 2022, it was a reasonably good place to be, particularly in early spring.
Now the image has modified tremendously, with mortgage charges rising from sub-6% ranges to just about 6.50% by some measures.
We’ve got seen a slight reprieve this week, however it wouldn’t shock me to see mortgage rates move higher before they come down meaningfully.
In different phrases, there could be quick home windows to lock in a cheaper mortgage rate, however charges will stay considerably greater than ranges seen on the finish of February and early March.
The opposite difficulty is that the battle has led to a inventory market rout.
So that you’ve bought potential dwelling patrons grappling with greater mortgage charges whereas additionally taking a look at a depleted inventory portfolio and concurrently paying extra on the pump.
The cumulative impact is shopper confidence might be decrease, and as such fewer folks will transfer ahead with a house buy.
Meaning 2026 may very well be one more tough 12 months for the housing market regardless of trying so vibrant simply weeks in the past.
Learn on: 2026 Mortgage Rate Forecast
Earlier than creating this web site, I labored as an account government for a wholesale mortgage lender in Los Angeles. My hands-on expertise within the early 2000s impressed me to start writing about mortgages 19 years in the past to assist potential (and current) dwelling patrons higher navigate the house mortgage course of. Comply with me on X for warm takes.
