Pending Home Sales Up 1.8% as Mortgage Rates Briefly Drop to 5.99%
US pending home sales rose 1.8% in February as mortgage rates dipped to 5.99% before rebounding to 6.3%, suggesting limited contract gains for March. Builder sentiment remains low at 38, with two-thirds offering incentives and over one-third cutting prices, while new executive orders target regulatory barriers and bank lending.
1. Pending Home Sales Rise
US pending home sales increased 1.8% in February, marking a modest recovery in contract signings as buyers responded to a temporary mortgage rate dip. This month-over-month gain reflects seasonal buying patterns but may not extend into March given rising borrowing costs.
2. Mortgage Rate Fluctuations
Mortgage rates fell to 5.99% in February before climbing back toward 6.3% by mid-March, driven by rising Treasury yields and concerns over inflation and geopolitical risks. The volatility in rate levels suggests homebuying demand will remain sensitive to even small rate shifts.
3. Builder Sentiment and Incentives
Builder sentiment stands at a subdued 38, with nearly two-thirds of builders offering incentives such as mortgage rate buy-downs and more than one-third cutting prices to entice buyers. These measures underline ongoing affordability pressures as rates stay north of 6%.
4. Executive Orders to Ease Housing
Two recent executive orders aim to reduce federal housing regulatory burdens to spur new construction and encourage community banks to reenter mortgage lending. The effectiveness of these measures will depend on local zoning authority and lenders’ willingness to assume risk.