The year-over-year decline suggests factors like economic uncertainty, affordability may “further tighten the market just as the buying season hits its stride.”
If home purchase contracts are a gauge for future sales, the real estate market may continue to be subdued in March and April.
Pending home sales in February were down 0.8% compared to a year ago, according to the National Association of Realtors, although they inched up 1.8% from January, consistent with seasonal trends.
The year-over-year decline is concerning, however, since 30-year mortgage rates were in the low-6% range throughout most of February — even briefly dipping below 6% — significantly below the averages seen a year ago when rates were around 6.85%.
Homebuying season off to a ‘delayed’ start: Low mortgage rates may not be enough to overcome other issues influencing buyer behavior, suggested Lisa Sturtevant, chief economist at Bright MLS. Ongoing economic uncertainty, affordability constraints and a lack of new listings, she noted, were among the factors keeping home shoppers on the sidelines last month.
“When 2026 started, there was a lot of optimism for a strong spring housing market,” Sturtevant said. “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.”
Still time for a rally? Even though pending sales were down year-over-year, the modest rise in signed home purchase contracts between January and February could mean the housing market is shaking off its winter slowdown after some intense snowstorms, said Sam Williamson, senior economist at First American.
“While recent mortgage rate volatility may weigh on buyer sentiment at the margin, the market is entering spring on firmer footing than it was a year ago, with stronger buying power, persistent pent-up demand, and gradually improving inventory continuing to support buyer interest,” Williamson said.
Global events and mortgage rates: Bond traders seem to be watching oil prices and the Iran war closely when making investment decisions, contributing to that rate volatility. Mortgage News Daily has seen the 30-year fixed rate easing over the past couple days, coming in at 6.29% in morning trading on March 17.
“The easiest conclusion for now is that bonds are taking some solace in an absence of big, new surges in oil prices,” wrote Matthew Graham, chief operating officer at MND in a blog post.
Limited inventory: With the official start of spring just days away, available listings could be an issue. For-sale inventory has been shrinking in recent months and is only up 5.7% compared to a year ago, according to Mike Simonsen, chief economist at Compass.
“For buyers and sellers heading into spring: Conditions are better than last year, but fragile,” Simonsen said in his weekly housing market update. “Fingers crossed, the chaos doesn’t spread further and wreck what little good news…
Read More: Housing market conditions ‘fragile’ as pending sales lag
