Pending Home Sales Surprise to Upside on Affordability Boost — Evening Brief – 03.17.26

The U.S. housing market showed early signs of renewed momentum in February, as modest improvements in affordability helped bring buyers back into the market despite ongoing uncertainty around interest rates and inflation. 

The Pending Home Sales Index increased 1.8% month-over-month, significantly outperforming expectations for a 1.0% decline and reversing a 0.8% drop in January, according to data released by the National Association of Realtors. While the monthly rebound suggests a near-term stabilization in housing demand, contract activity remained slightly lower on a year-over-year basis, down 0.8% from February 2025. 

The improvement points to a market that remains highly rate-sensitive, with even incremental changes in affordability driving shifts in buyer behavior. 

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

Regionally, the gains were concentrated in more affordable parts of the country. The Midwest led with a 4.6% increase, reflecting its relative affordability advantage, followed by the South at 2.7% and the West at 0.9%. In contrast, the Northeast declined 3.6%, highlighting persistent affordability challenges in higher-cost markets. 

At the metro level, San Diego–Chula Vista–Carlsbad, California posted the largest increase, with pending sales rising 13.5%, followed by Jacksonville, Florida, up 12.1%, underscoring continued demand in select high-growth and Sun Belt markets. 

The data suggests housing demand remains intact but fragile, with affordability acting as the primary catalyst. However, broader macro risks—particularly rising oil prices and their potential impact on mortgage rates—could quickly reverse recent gains.