The number of existing homes that went under contract in the U.S. rose in February, a sign of steady momentum for the housing market.
An index measuring pending home sales—a gauge of purchases before they become final—jumped 3.5% to a seasonally adjusted reading of 109.1 in February, the National Association of Realtors said Monday. That was the highest level in seven months.
An index of 100 is equal to the average level of contract activity during 2001, which the NAR considers a “normal,” or balanced, market for the current U.S. population.
Economists surveyed by The Wall Street Journal had predicted a 1.2% increase in February’s sales. January’s reading was revised down to 105.4 from an initially reported 106.0.
Pending sales offer a glimpse of upcoming sales activity. A sale is considered pending when the contract has been signed but the transaction hasn’t closed. Pending sales typically close, or are occasionally canceled, within one or two months of signing.
“After some volatility this winter, the latest data is encouraging in that a decent number of buyers signed contracts last month, lured by mortgage rates dipping to their lowest levels in nearly a year and a modest, seasonal uptick in inventory,” said Lawrence Yun, the Realtors’ chief economist.
The housing market in 2015 was by some measures the strongest since before the recession. But figures at the start of this year have been mixed amid tight supplies and rising prices.
“Without adequate supply, sales will likely plateau,” Mr. Yun said.
Sales of existing homes—roughly 90% of all home purchases—fell 7.1% in February from January, the National Association of Realtors said last week. A separate Commerce Department report last week said purchases of new, single-family homes increased 2% from a month earlier to a seasonally adjusted annual rate of 512,000.
The Realtors’ group is forecasting about 5.38 million existing-home sales this year, an increase of 2.4% from 2015.
Write to Jeffrey Sparshott at [email protected]