Pending sales of existing homes dipped 0.4 percent from January to February, but remained at their second-highest level in nearly three years, according to an index maintained by the National Association of Realtors.
NAR’s Pending Home Sales Index, which represents existing-home contracts signed but not yet closed, slipped from a downwardly revised 105.2 in January to 104.8 in February. But February’s score was still up 8.4 percent from a year earlier, NAR reported.
The report comes a day after the S&P/Case-Shiller 20-City Composite Index posted its highest year-over-year gain in six years. The positive housing news helped drive the Dow Jones Industrial Average to a record high and push the S&P 500 Index to just two points short of its own all-time high.
A monthly report released yesterday also showed that new-home sales remained close to the four-year high that they reached in January, dipping 4.6 percent month over month.
Tight inventory, which has risen marginally recently, is preventing contract signings from increasing more, said Lawrence Yun, chief economist at NAR.
"Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels," Yun said. "Most local home builders are small businesses and simply don’t have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market."
In April 2010, when the federal homebuyer tax credit was still in place, the index hit 111.3, but soon fell back down. An index score of 100 is equal to the average level of sales-contract activity in 2001, a year in which home sales fell in a range that’s considered "normal" for the current U.S. population.