Key takeaways

  • Pending home sales rose 1.8% in February after two months of declines, though these contracts to buy existing houses remained 0.8% below last year’s level.
  • Improved affordability — including average monthly mortgage payments under $2,000 and housing costs at about 21% of income — helped lift activity.
  • Regional results were mixed, with the Midwest, South and West posting month-to-month gains, while the Northeast lost traction.

 Contracts to purchase existing single-family houses and condos rose modestly in February amid signs of improving affordability, but also uncertainty about how the conflict with Iran may affect the spring buying season.

Pending sales of these homes were up 1.8% from the prior month, the National Association of Realtors reported Tuesday, reversing two months of declines. However, contracts were down 0.8% from the same period in 2025. Contracts to buy houses tend to precede actual sales by one to two months, so they can be a useful gauge of the direction in which the market is headed.

 

“The slight gain in pending contracts appears to be driven by improved affordability conditions,” Lawrence Yun, NAR chief economist, said in a statement. “However, those conditions could reverse if higher oil prices lead to an uptick in mortgage rates.”

On a regional basis, the more affordable Midwest showed the most strength in February. But since February 2025, the West has seen the greatest increase in contracts:

Region Month-over-month % increase in pending sales Year-over-year % increase in pending sales
Midwest +4.6% -0.1%
Northeast -3.6% -12.1%
South +2.7% +1.2%
West +0.9% +3.2%
Source: National Association of Realtors  

The metropolitan areas where pending sales saw the biggest annual gains in February were mostly concentrated in the West and South:

Rank Region % change year over year
1. San Diego–Chula Vista–Carlsbad, CA +13.5%
2. Jacksonville, FL +12.1%
3. San Jose–Sunnyvale–Santa Clara, CA +10.6%
4. Denver–Aurora–Centennial, CO +10.5%
5. Miami–Fort Lauderdale–West Palm Beach, FL +10.0%
6. Phoenix–Mesa–Chandler, AZ +9.8%
7. Sacramento–Roseville–Folsom, CA +9.3%
8. Kansas City, MO-KS +8.7%
9. Austin–Round Rock–San Marcos, TX +8.1%
10. Oklahoma City, OK +7.4%
Source: National Association of Realtors  

Miami, Oklahoma City and Phoenix have all seen increases in contracts of 6.3% or more in each of the past three months.

These metropolitan areas, particularly in the Northeast and Midwest, saw the biggest decreases:

Rank Region % change year over year
1. Hartford-West Hartford-East Hartford, CT -8.9%
2. Seattle-Tacoma-Bellevue, WA -6.2%
3. Detroit-Warren-Dearborn, MI -5.4%
4. Cleveland, OH -4.8%
5. (tie) Memphis, TN-MS-AR -4.7%
5. (tie) Nashville-Davidson-Murfreesboro-Franklin, TN -4.7%
7. Providence-Warwick, RI-MA -4.4%
8. Cincinnati, OH-KY-IN -3.7%
9. Buffalo-Cheektowaga, NY -3.6%
10. Baltimore-Columbia-Towson, MD -3.1%
Source: National Association of Realtors  

As always, a critical factor in buyer behavior is the average rate for a 30-year fixed-rate mortgage, which had been gradually falling toward the 6% mark over the past few months. After briefly dipping below that threshold, the rate has crept back up over the past two weeks after the U.S. launched attacks on Iran on the last day of February.

The conflict has led to higher oil and gas prices, which nudged borrowing costs upward.

However, homeowners’ average monthly payments and what they pay for housing as a share of their income have been looking better in recent months, according to the NAR’s affordability index.

The group reported last week that the average homeowner spent under $2,000 per month on a mortgage payment in February, or roughly 21% of their income. The percentage, which doesn’t account for property taxes or home insurance, was more than 24% a year ago.

“For first-time homebuyers, purchasing a home is not a snap decision,” Yun said. “It takes time to build credit, save for a down payment, and fulfill existing rental lease agreements.

"Still, there is sizable pent-up demand that could be released into the market," he said. "Although job gains have been sluggish in recent months, there are still 6 million more jobs in the country than in the pre-COVID period.”