Although home affordability improved in February with mortgage rates below 6%, the number of pending home sales for the year remained depressed due to economic and political headwinds.
Pending home sales rose 1.8% month over month in February as mortgage interest rates briefly fell below 6%, the National Association of Realtors said Tuesday. However, the metric, which tracks the signing of contracts for existing homes, was still down 0.8% for the year, reflecting market headwinds.
Lawrence Yun
“The small increase in outstanding contracts appears to be driven by improved affordability conditions,” Lawrence Yun, NAR’s chief economist, said in a report.
The Midwest outperformed other regions, with pending sales increasing 4.6% month-over-month and relatively flat year-over-year. While the South and West both recorded modest monthly and annual increases, weak supply and rising home prices in the Northeast depressed contract signings compared to January 2025 (-3.6%) and February 2025 (-12.1%).
Yun said home sales pending due to the Iran conflict could be hit hard in March if rising oil prices lead to higher mortgage rates. A recent Inman article explains this relationship, and several economists say that higher oil prices lead to higher fuel costs, which are passed on to the market as commodity inflation.
Jeff Tucker, Windermere’s chief economist, said if inflation starts going in the wrong direction, the Fed could choose to hold off on its planned rate cuts or actually “raise” rates. “It’s not something everyone likes,” he said of the option of raising interest rates. “But that’s the cure for demand shocks.”
Dr. Lisa Sturtevant
Lisa Sturtevant, chief economist at Bright MLS, said economic and political instability is holding consumers back, raising the possibility of a weak spring home buying season.
“When 2026 began, there was a lot of optimism that the spring housing market would be strong,” she said in an emailed statement. “At this time, the start of the spring home buying season has been delayed, sellers are holding off on putting their homes on the market, and buyers are wondering if it’s the right time to buy.”
“The conflict with Iran has brought entirely new concerns to the economy and housing market, as oil prices have soared and the possibility of conflict resolution has become more uncertain,” she added. “If the conflict drags on, the spring housing market could not only be delayed but also be far less robust than expected earlier this year.”
Hannah Jones |Credit: Realtor.com
Despite the volatility, Hannah Jones, senior economic research analyst at Realtor.com, said the market is “structurally moving into more buyer-friendly territory” and could see a solid spring in a “well-supplied” market. Mr. Yun echoed Mr. Jones in his final assessment of pending home sales in February, saying there was still “significant pent-up demand that could be released into the market.”
“For first-time homebuyers, buying a home is not a quick decision. It takes time to build credit, save a down payment, and honor an existing rental lease agreement. Although job growth has slowed in recent months, there are still 6 million more jobs in the country than before the coronavirus,” he said.
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